Kitchen & Bath Design News

MAR 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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SOLID MARKET FUNDAMENTA are expected to support continued housing and remodeling growth in 2019, although the market continues to face headwinds, includ- ing rising construction costs and potentially higher interest rates, 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 START The recent decline in mortgage rates is helping to sustain homebuilder sentiment, while low unemployment, solid job growth and favor able demographics should support housing demand in the coming months, the National Association of Home Builders said last month. "Builders need to continue to manage rising construction costs to keep home prices afford- able, particularly for young, entry-level buyers, said Robert Dietz, chief economist for the Washington, DC-based NAHB. "Lower interest rates…will help housing continue to grow at a modest clip," Dietz added. The NAHB esti- mated that single-family starts totaled 876,000 units in 2018, a 3% gain over single-family starts in 2017. RESIDENTIAL REMODELI While many market fundamentals – including favorable demographics and economic growth – remain favorable, remodelers "continue to face challenges" in keeping prices competi- tive in the face of increased labor and build ing-materials costs, the National Association of Home Builders said last month. "The remodeling market remains strong, but there is concern related to rising labor and input costs," said NAHB Remodelers Chair Joanne Theunissen. "Remodelers are battling sticker shock with many homeowners who expect lower bids." The NAHB's Remodeling Market Index, a gauge of current and future condi tions, has been consistently above 50 since the second quarter of 2013, a sign that more remodelers report market activity is higher compared to the prior quarter than report i is lower, the NAHB noted (see related story, below; graph, above) EXISTING-HOME SALE Lingering softness in the 2018 market for existing homes was largely a reflection of both limited inventory and higher mortgage rates, although lower rates are expected to spur a revival in sales as 2019 unfolds, the National Association of Realtors predicted last month. "The housing market is obviously very sensi- tive to mortgage rates [but] now, with mort gage rates lower, some revival in home sales is expected going into spring," said Lawrence Yun, chief economist for the Washington, DC- based NAR. Existing-home sales, estimated at a seasonally adjusted annual rate of 4.99 million units in 2018, were down more than 10% from a year earlier, according to the NAR APPLIANCE SHIPMENT Domestic shipments of major home appliances rose in Decemb er 2018 compared to the same month the prior year, although shipments for the full year of 2018 were essentially the same as in 2017, according to the Association of Home Appliance Manufacturers. The Washington, DC-based AHAM reported last month that December appliance shipments totaled 7.27 mil- lion units, up 4.5% from the 6.96 million units shipped in Decemb er 2017. Sales for 2018 (79.2 million units) were nearly identical to the same 12-month period in 2017, AHAM noted. Remodeling Seen Topping $350B, Despite Slowing Growth CAMBRIDGE, MA — Annual growth in the ma ket for home improvement and repair is expect ed to slow in 2019, although residential remod- eling expenditures are forecast to reach a record level of more than $354 billion, according to the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. According to the latest forecast from the Cambridge, MA-based Joint Center, annua growth in renovation and repair spending to owner-occupied homes in the U.S. will decline from 7.5% in 2018 to the market's historical average growth rate of about 5.1% this year (see related story and graph above) "Slowing house price appreciation, flat home sales activity and rising mortgage interest rates are deflating owners' interest in making major investments in home improvements," said Joint Center Managing Director Chris Herbert Herbert added that, despite overall market growth, anticipated slowdowns in homebuild- ing, sales of building materials and remodeling permits "all point to a more challenging envi- ronment for home remodeling in 2019." Market Fundamentals Seen as Solid Although annual growth in the U.S. market for home improvement and repair is expected to slo from 7.5% in 2018 to 5.1% in 2019, residential remodeling expenditures are nevertheless bein forecast to reach a record level of more than $354 billion (see related stories, at left and below). Source: Joint Center for Housing Studies of Harvard Un THE EXPANDING U.S. MARKE FOR RESIDENTIAL REMODEL Homeowner Expenditures for Improvements & Repairs in Billions of Dolla 2016 2017 2018 2019 $295.2 $313.6 $336.9 $354.2 12 Kitchen & Bath Design News • March 2019 BAROMETERS A LOOK AT KEY STATISTICS & TRENDS SHAPING THE IND MARKET ANALYS

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