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Barometers { A look at key statistics & trends shaping the industry } 6 | Kitchen & Bath Design News | May 2015 S haky consumer confidence combined with rising prices and interest-rate fears is put- ting a damper on the nation's housing recovery, even though signs still point to continued market growth. Among the key statistics and forecasts re- leased in recent weeks by government agencies, research frms and industry- related trade associations were the following: HOUSING STARTS & NEW-HOME SALES Wavering consumer confdence con- tinues to impact the housing recovery, with potential home buyers waiting for a stronger, more reliable economy before making a purchase, and build- ers responding to that reluctance with no more than cautious optimism, ac- cording to the chief economist for the National Association of Home Build- ers. Despite a recent drop in housing production, David Crowe of the Wash- ington, DC-based NAHB said he still "expects the housing market to move forward this year in step with an im- proving economy." While housing starts slipped in the latest series of numbers, permit issuance was up, a positive sign going forward. "Most sales activity continues to be among existing home owners who are trading up to new construction and taking advantage of low mortgage rates," stated Crowe. EXISTING-HOME SALES Although recent sales of existing homes have shown signs of modest improvement, "there's been some stagnation in the market in recent months," the chief economist for the National Association of Real- tors said last month. According to Lawrence Yun of the Washington, DC-based NAR, insufcient supply appears to be hampering prospective buyers in several areas of the country, and is hiking prices to near unsuit- able levels. "Stronger price growth is a boon for homeowners looking to build additional equity, but it con- tinues to be an obstacle for current buyers looking to close before rates rise," Yun said. "With all indications pointing to a rate increase from the Federal Reserve this year, afordabil- ity concerns could heighten as home prices and rents both continue to ex- ceed wages," he added. An NAR study released last month found that the disparity between rent and income growth is widening in metro areas throughout the country, and is mak- ing it harder for renters to become homeowners. CABINET & VANITY SALES Sales of kitchen cabinets and vanities continued to gain ground in 2015, rising in February over the same month last year, the Kitchen Cabi- net Manufacturers Association said last month. According to the Reston, VA-based KCMA, manufacturers participating in the association's monthly "Trend of Business" sur- vey reported that February sales of cabinets and vanities rose 7.1% over February of 2014. Sales of stock cabinets rose 0.3%, while semi- custom cabinet sales gained 13.8% and custom cabinet sales rose 9.6%, the KCMA said. Year-to-date sales through February were up 5.9% com- pared to the same two-month period last year, the KCMA added. APPLIANCE SHIPMENTS Domestic shipments of major home ap- pliances declined in March, although year-to-date fgures through the frst three months of 2015 remained up slightly over the previous year's num- bers, according to the Association of Home Appliance Manufacturers. The Washington, DC-based AHAM re- ported last month that March, 2015 appliance shipments totaled 7.4 mil- lion units, down 3.3% from the 7.6 million units shipped in March, 2014. Year-to-date shipments through March were up 1.3% over the total for the frst three months of 2014, AHAM said. Washington, DC — Business conditions remain gener- ally strong at residential architecture frms, with all of the major housing sectors seeing some improvement, though two – entry-level homes and second/vacation homes – are having problems gaining traction. That's one of several major fndings from the latest in a series of "Home Design Trends" surveys conducted in the fourth quarter of 2014 by the American Institute of Architects (see related Consumer Buying Trends, Page 8) . While all of the major sectors were reported by the AIA as "positive," some are performing above expecta- tions while others have been disappointing (see related graphic, above) . "Generally, housing markets work best when the strength is at the bottom of the market," the Washington, DC-based AIA pointed out. "Newly formed households and young renters looking to buy a home would typically pur- chase a more afordable starter home (and) the seller of that home would likely trade up to a more expensive home – and eventually this process might lead to the sale of an upper-end custom/luxury home." During the current economic cycle, however, conditions have generally reversed this process, the AIA noted. "The custom/luxury market has been quite healthy to date, but younger groups have had a difcult time purchasing entry- level homes. Without these buyers, strength for move-up and custom/luxury homes is eventually likely to wane." Work on kitchen and bath remodels, as well as additions and alterations to existing structures, are reported to be extremely strong at present. For both segments, however, the share of respondents reporting improving conditions is slightly lower compared to the end of 2013, "which may indicate that the pace of growth for these projects will begin to slow in coming quarters," the AIA said. Conditions Seen Generally Strong At Residential Architect Firms MARKET ANALYSIS Shaky Confdence Dampening Market 2013 2014 Remodeling Additions & Alterations 65% 61% Kitchen & Bath Remodeling 64% 55% Custom/Luxury Homes 37% 35% Move-up Homes 33% 35% Townhouse/Condo 13% 15% First-Time Buyer/Affordable Homes 13% 8% Second/Vacation Homes -5% 3% 2015 HOUSING RECOVERY BY MAJOR MARKET SECTOR % OF SURVEY RESPONDENTS REPORTING SECTOR 'IMPROVING' MINUS THOSE REPORTING 'WEAKENING' While conditions remain generally strong at residential architecture frms, activity varies within the major housing sectors, according to a 4th-Quarter 2014 survey conducted by the American Institute of Architects (see related story, below) . Work on kitchen/bath remodels, as well as additions and alterations to existing structures, are reported to be extremely strong. For both segments, however, the share of respondents reporting improving conditions is slightly lower compared to the end of 2013, a sign that the pace of growth will begin to slow in coming quarters. Source: American Institute of Architects