Kitchen & Bath Design News

FEB 2019

Kitchen & Bath Design News is the industry's leading business, design and product resource for the kitchen and bath trade.

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HOUSING GROWTH CONTINUED as 2018 wound to a close, although solid market fundamentals are still being offset by rising prices and dampening consumer sentiment. Among the key statistics and forecasts released in recent weeks by government agencies, research firms and industry-related trade asso- ciations were the following: HOUSING STARTS Rising affordability continues to hinder single-family housing production, even in the face of favorable demographics and solid demand, the National Association of Home Builders said last month. "Favorable demo- graphics support healthy housing demand, so it's frustrating that the affordability crisis is preventing many consumers from achiev- ing their goal of buying a home," said Robert Dietz, chief economist for the Washington, DC-based NAHB. "While homeownership has increased over the last nine quarters, we can expect that upward momentum to stop due to rising costs," Deitz added. NAHB chairman Randy Noel noted that the association is "hear- ing that consumer demand exists, but that customers are hesitating to purchase because of rising costs." RESIDENTIAL REMODELING The remodeling side of the housing market "continues to drive positive business con- ditions" at residential architecture firms in all U.S. regions, the American Institute of Architects reported last month. According to the AIA's latest in a quarterly series of "Home Design Trends Surveys," conducted in the third quarter of 2018, project backlogs at residential architecture firms remained at "healthy levels" of just under five months on average. While home improvement sectors continue to outpace new construction, cus- tom/luxury homes are also exhibiting "strong growth," the AIA said (see related graph, above right). EXISTING-HOME SALES Market conditions were mixed as 2018 wound to a close, with "good signs of stabilizing home sales," although existing home sales – pegged at a seasonally adjusted annual rate of 5.7 million units – were down 7% from the previous year, the National Association of Realtors reported. The recent rise in resales "is a welcomed sign for the market," according to the Washington, DC-based NAR, which noted that "rising inven- tory is taming home-price appreciation." While total housing inventory at the end of 2018 declined, it was still significantly higher than it was a year earlier, the NAR reported. APPLIANCE SHIPMENTS Domestic shipments of major home appliances gained slightly in November 2018 compared to November of the prior year, with year-to- date shipments still remaining below those of 2017, according to the Association of Home Appliance Manufacturers. The Washington, DC-based AHAM reported last month that November appliance shipments totaled 5.93 million units, up 1.8% from the 5.83 million units shipped in November 2017. Year-to-date sales through November were 0.4% below sales during the same 11-month period in 2017, AHAM noted. Home-Buying Sentiment Continues to Wane Amid Price Hikes WASHINGTON, DC — Consumer sentiment about home buying, impacted by rising prices, continued to diminish at the close of 2018, even though a majority of Americans still think it is a "good time" to buy, according to new findings from a National Association of Realtors (NAR) survey. NAR's fourth quarter 2018 "Housing Opportunities and Market Experience (HOME) Survey" also found that a majority of those polled (59%) believe that the economy is improving. Optimism is the greatest among high wage-earners and urban residents. According to Lawrence Yun, chief econo- mist for the Washington, DC-based NAR, rapid price increases have impacted the home-buying marketplace. "Consistently fast-rising home prices well in excess of income growth over recent years have left buyers frustrated, while slowly enticing would-be sellers to consider listing," Yun said. The NAR reported that only 34% of those surveyed strongly indicated that last year's fourth quarter was a good time to buy a home, down from 39% in the third quarter and 43% a year earlier. The percentage of those who believe that the fourth quarter was not a good time to buy was up from 28% a year ago. Median home prices have risen roughly 44% in the past six years, while average hourly wage earnings rose by just 16%, according to the NAR. Price Gains Seen Stunting Housing The remodeling side of the housing market, including kitchen and bath renovations, continues to drive positive business conditions at residential architecture firms throughout the U.S. However, while home improvement sectors continued to outpace all forms of new construction, custom/ luxury homes also exhibited strong growth through the third quarter of 2018, as reflected by the graph above. Source: American Institute of Architects 'Home Design Trends Survey,' 3rd Qtr., 2018 BUSINESS CONDITIONS BY HOUSING MARKET SECTOR % of Residential Architects Reporting Sector 'Improving' Minus % Reporting 'Weakening' Remodeling Additions & Alterations Kitchen & Bath Remodeling Custom/Luxury Homes Move-Up Homes Townhouse/Condo Second/Vacation Homes First-Time Buyer/Affordable Homes -2% -3% 55% 52% 20% 17% 14% 12 Kitchen & Bath Design News • February 2019 BAROMETERS A LOOK AT KEY STATISTICS & TRENDS SHAPING THE INDUSTRY MARKET ANALYSIS

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