Kitchen & Bath Design News

SEP 2018

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SIGNIFICANT OBSTACLES – includ- ing building material tariffs, affordability issues and a lack of inventory – are impeding growth in the nation's housing market, despite a steadi- ly improving economy, analysts say. Among the key statistics and forecasts released in recent weeks by government agencies, research firms and industry-related trade associations were the following: HOUSING STARTS Increases in lumber prices stemming largely from the imposition of import tariffs "are having a strong impact on builders' ability to meet growing demand," according to the National Association of Home Builders. The Washington, DC-based NAHB said last month that while overall production is 7.8% higher than at the same time last year, recent declines in housing starts "raise concerns" about a near-term soft- ening. "The concern over construction material costs, especially lumber, is making it more difficult to build homes at competitive prices, [while] the soft permit report does not suggest a significant increase in production in the near term," said NAHB Senior Economist Michael Neal. The NAHB noted, however, that demand for single-family housing continues to rise as the economy strengthens. EXISTING-HOME SALES Affordability and limited inventory are "eroding buyer confidence" in the market for existing homes, even though most Americans believe that now is a good time to buy and sell, the chief economist for the National Association of Realtors said last month. "Inventory remains the driving force [in resales]," said Lawrence Yun of the Washington, DC-based NAR. "Improving current supply conditions is critical to helping remove some of the barriers holding back potential buyers." Citing findings from the NAR's second quarter "Housing Opportunities and Market Experience (HOME)" survey, Yun said that while 75% of surveyed U.S. households believe that now is a good time to sell, and 68% think it's a good time to buy, a majority of consumers believe that home pric- es will continue to rise. "Hopefully, this seller optimism will lead to an increase in invento- ry," Yun said. CABINET & VANITY SALES Sales of kitchen cabinets and vanities gained marginally in June compared to sales in June of 2017, the Kitchen Cabinet Manufacturers Association said last month. According to the Reston, VA-based KCMA, manufacturers participating in the association's "Trend of Business" survey reported that June sales of cabinets and vanities were 0.9% above those of June last year. Sales of stock cabinets rose 3.6%, while semi-custom cabinet sales fell 1.6% and custom cabinet sales declined 0.7%, the KCMA said. Year-to-date sales through June were up just 1.0% compared to the same six-month period in 2017, the association added. APPLIANCE SHIPMENTS Domestic shipments of major home applianc- es fell sharply in June compared to the same month a year ago, according to the Association of Home Appliance Manufacturers. The Washington, DC-based AHAM reported last month that June appliance shipments totaled 8.40 million units, down 9.8% from the 9.31 million units shipped in June, 2017. Year-to- date sales through June were 1.4% below sales during the same six-month time period last year, AHAM said. Home Additions Seen by Architects as Key Emerging Trend WASHINGTON, DC — Homeowners are increasingly looking to architects and other design professionals to design additional living quarters for their homes, according to a new survey conducted by the American Institute of Architects. The survey, undertaken during the first quarter of 2018 among a panel of more than 500 residential architecture firms that concentrate their practice in the residential sector, described a "new trend" taking shape among homeowners seeking to add finished basements and attics to their properties. The latest in a quarterly series of AIA "Home Design Trends" survey results also shows major interest among architecture firm clients in home additions, including acces- sory dwellings and micro-housing, that can function as separate living quarters, ostensibly as a source of rental income, said AIA Chief Economist Kermit Baker. "It could be due to children returning home to live with their parents to save money, or to homeowners taking advantage of a growing rental market due to the lack of affordable housing in major markets throughout the country," Baker said. Obstacles Impeding Growth in Housing A growing economy and labor market, coupled with rising home values and increased equity levels, are boosting homeowners' willingness to invest in improvements, according to the Joint Center for Housing Studies of Harvard University. The Joint Center projects that annual growth in remodeling expenditures will taper somewhat in the first half of 2019, but remain about 7%, with annual spending on residential improvements and repairs reaching nearly $347 billion by the mid- dle of 2019. Although projected remodeling growth remains strong, the low inventory of existing homes for sale is holding back even larger gains, Joint Center analysts said. Source: Joint Center for Housing Studies, Harvard University LEADING INDICATOR OF RESIDENTIAL REMODELING ACTIVITY Market Projections Through Second Quarter of 2019, in Billions $346.8 $339.0 $336.7 $331.0 $324.1 $317.2 $313.9 $308.3 $302.5 $297.2 2 2 2 (P) 3 3 (P) 4 4 (P) 2017 -1 2018 -1 2019 -1 (P) 10 Kitchen & Bath Design News • September 2018 BAROMETERS A LOOK AT KEY STATISTICS & TRENDS SHAPING THE INDUSTRY MARKET ANALYSIS

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