Kitchen & Bath Design News

MAY 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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JOB GROWTH, RISING household incomes, lower mortgage rates and higher consumer confidence are expected to fuel continued housing and remodeling growth into the future, according to the latest forecasts by market analysts. Among the key statistics and forecasts released in recent weeks by govern- ment agencies, research firms and industry- related trade associations are the following: HOUSING STARTS & NEW-HOME SALES Home builders who can produce affordable housing will be able to meet sales demand being fueled by "healthy household forma- tions [along with] solid job and wage growth," according to Robert Dietz, chief economist for the National Association of Home Builders. The Washington, DC-based NAHB said last month that an early-year rebound in housing starts mirrors home-builder confidence, which declined in the latter part of 2018 but rebound- ed early this year. "Declines in mortgage rates brought buyers back into the market," said NAHB Chairman Greg Ugalde. "After a challenging period last fall, builders expect a solid spring home buying season." But despite the uptick in starts, "builders remain cautious" in light of single-family permit numbers that remain soft, NAHB officials noted. EXISTING-HOME SALES A "powerful combination" of lower mortgage rates, greater inventory, rising income and higher consumer confidence is driving the latest rebound in existing-home sales, according to the National Association of Realtors, which reported that resales posted strong gains in February, experiencing the largest month-over- month gain since December 2015 (see related graph, above right). While existing-home sales remain down from a year ago, moderating home prices combined with gains in household income are expected to boost housing afford- ability, luring more buyers to the market, according to Lawrence Yun, chief economist for the Washington, DC-based NAR. While recent mortgage-rate declines have had only a modest impact on 2019 sales thus far, the lower rates "will inevitably lead to more sales," Yun said, adding that the market is still suffering from an inventory shortage, particularly on the lower end. CABINET & VANITY SALES Sales of kitchen cabinets and vanities gained ground in 2018 over sales a year earlier, the Kitchen Cabinet Manufacturers Association said last month. According to the Reston, VA- based KCMA, manufacturers participating in the association's monthly "Trend of Business" survey reported that 2018 sales of cabinets and vanities, after posting a 0.7% gain in December, were 2.0% above those of the previous year. Sales of stock cabinets gained 5.3% for the year, while custom cabinet sales were up 3.5%, the KCMA said. In contrast, semi-custom cabinet sales declined 5.7% in 2018 compared to the previous year, the KCMA added. APPLIANCE SHIPMENTS Domestic shipments of major home appliances declined in February compared to the same month in 2018, according to the Association of Home Appliance Manufacturers. The Washington, DC-based AHAM reported last month that February appliance shipments totaled 5.57 million units, down 7.8% from the 6.04 million units shipped in February 2018. Year-to-date appliance shipments through February were down 4.5% from the same two- month period in 2018, AHAM said. Remodeling Seen Picking Up Slack as Homebuilding Lags CAMBRIDGE, MA — As homebuilding strug- gled to meet the nation's growing housing needs, the home remodeling market expanded by more than 50% since the end of the Great Recession, hitting a record of nearly $425 bil- lion in 2017, according to a new report from the Harvard Joint Center for Housing Studies. According to the report, released in March by the Cambridge, MA-based Joint Center, the aging of the nation's housing stock "has been a boon to the remodeling industry, with spending surpassing investment in homebuilding every year for more than a decade." The steady uptick in house prices and the aging population are also driving increased residential remodeling spending, according to Joint Center researchers. "Rising prices mean growing home equi- ty, which provides owners both the incentive and the means to undertake more and larger projects," the report found. "Additionally, old- er households have higher homeownership rates than younger households, and many have the resources to afford major renova- tions, including accessibility modifications that allow them to remain safely in their homes as they age." Households aged 55 and over account for half of all improvement spending by homeown- ers, according to the Joint Center. "Over the next decade, the strong preference of older homeowners to age in place and the in- creasing difficulty of building affordable hous- ing will continue to hinder the construction of new homes," said Kermit Baker, director of the Joint Center's Remodeling Futures Program. "The remodeling industry will therefore retain its critical role in helping the country meet its housing needs." Continued Growth Seen in Cards for 2019 A combination of lower mortgage rates, greater inventory, rising income and higher consumer confidence is driving a rebound in existing-home sales that's expected to be sustained through- out 2019, as reflected in the graph above. The seasonally adjusted annual rate for resales, which dipped to a several-year low of less than 5 million units in January, rose to a projected 5.5+ million units after a significant uptick in February (see related story at left). Source: National Association of Realtors THE RECENT & CURRENT PACE OF EXISTING-HOME SALES Seasonally Adjusted Annual Rate in Thousands of Units 2016 Jan. 2019 2018 2017 Feb. 2019 (proj.) 5,450 5,510 5,340 4,930 5,510 10 Kitchen & Bath Design News • May 2019 BAROMETERS A LOOK AT KEY STATISTICS & TRENDS SHAPING THE INDUSTRY MARKET ANALYSIS

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