Kitchen & Bath Design News

NOV 2018

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THE NATION'S HOUSING and resi- dential remodeling markets continue to remain on generally solid footing in the face of several key challenges that may impact conditions in the months ahead, 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 Home builders remain "largely confident" because the economy is solid and demograph- ics point to continued demand, but the housing market is likely to experience softening in the months ahead, the National Association of Home Builders predicted last month. According to Robert Dietz, chief economist for the Washington, DC-based NAHB, affordability is a major concern, even though home builders remain generally bullish on both current and future prospects (see related graph, at right). "A growing economy and rising incomes com- bined with increasing household formations should boost demand for new single-family homes," Dietz observed. "However, housing af- fordability is becoming a challenge, as builders face overly burdensome regulations and rising building material costs, prompted partially by recently imposed tariffs on a wide range of products." Interest rates are also continuing their gradual upward climb, Dietz added. EXISTING-HOME SALES The recent decline in existing-home sales "ap- pears to have hit a plateau," with robust sales in the Northeast and a moderate uptick in the Midwest helping to balance out losses in the South and West, and halting months of down- ward momentum, the National Association of Realtors reported last month. "With inven- tory stabilizing and modestly rising, buyers appear ready to step back into the market," said Lawrence Yun, chief economist for the Washington, DC-based NAR. Yun cautioned, however, that while inventory continues to show modest year-over-year gains, "it is still far from a healthy level and new home construc- tion is not keeping up to satisfy demand." CABINET & VANITY SALES Sales of kitchen cabinets and vanities rose in August compared to sales in August 2017, the Kitchen Cabinet Manufacturers Association said last month. According to the Reston, VA-based KCMA, manufacturers participat- ing in the association's "Trend of Business" survey reported that August sales of cabinets and vanities were 4.4% above those of August last year. Sales of stock cabinets gained 5.1%, while semi-custom cabinet sales rose 3.1% and custom cabinet sales were up 6.2%, the KCMA said. Year-to-date sales through August were up 1.8% compared to the same eight-month period in 2017, the association added. APPLIANCE SHIPMENTS Domestic shipments of major home applianc- es declined in August compared to the same month a year ago, while year-to-date shipments remained slightly below those of 2017, accord- ing to the Association of Home Appliance Manufacturers. The Washington, DC-based AHAM reported last month that August ap- pliance shipments totaled 5.56 million units, down 1.2% from the 5.68 million units shipped in August, 2017. Year-to-date sales through August were 1.2% below sales during the same eight-month time period last year, AHAM said. 2018 Remodeling Growth Forecasted Across Major Metro Areas CAMBRIDGE, MA — Homeowners are expected to increase spending on improvements across 50 of the nation's largest metropolitan areas in 2018, according to new projections released last month by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. Spending by homeowners will increase by at least 5% in 41 of the 50 metro areas tracked, and by 10% or more in 11 of these major met- ros, led by Kansas City, Charlotte, San Antonio, Dallas and Sacramento, according to the Cambridge, MA-based Joint Center. None of the 50 major metro areas tracked are projected to see spending for residential remodeling decline in 2018, analysts added. "Growth is projected to be particularly strong in many of the nation's more affordable markets," said Chris Herbert, managing director of the Joint Center for Housing Studies. "At the same time, there are a few high-cost markets where low housing supply is spurring renovation." "Our projections show that growth in remodeling is not concentrated in just one area, but is widespread," added Elizab eth La Jeunesse, senior research analyst in the Joint Center's Remodeling Futures Program. "Average growth through 2018 in major metros of the South, West and Midwest is projected to be close to 7.4%, while growth in metros of the Northeast will b e slightly lower (at 5.6%)," Jeunesse added. Market Steady in Face of Challenges Despite rising affordability concerns, home-builder confidence in the market for newly built single-family homes remained at a 'solid' 67 reading in September, according to the National Asso- ciation of Home Builders/Wells Fargo Housing Market Index (HMI). Derived from a monthly sur- vey of NAHB members, the HMI gauges builder perceptions of current single-family home sales, as well as sales expectations for the next six months. Scores for each component are then used to calculate a seasonally adjusted index, where any number over 50 indicates that more builders view conditions as 'good' rather than 'poor.' Source: National Association of Home Builders/Wells Fargo HOME-BUILDER CONFIDENCE REMAINING AT SOLID LEVELS Seasonally Adjusted NAHB/Wells Fargo Housing Market Index 72 71 70 70 68 68 68 67 67 January February September August July June May April March 8 Kitchen & Bath Design News • November 2018 BAROMETERS A LOOK AT KEY STATISTICS & TRENDS SHAPING THE INDUSTRY MARKET ANALYSIS

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