Kitchen & Bath Design News

JUN 2019

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THE NATION'S HOUSING market, midway through 2019, continues to be char- acterized by positive growth forecasts, as well as a lingering variety of headwinds, industry analysts report. 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 Excessive regulations, a lack of buildable lots and ongoing labor shortages are among the factors negatively affecting the housing market, although recent declines in mortgage rates "should help in future months," the National Home Builders Association said last month. Single-family hous- ing starts through the first quarter of 2019 are off about 5% from a year ago, with weakness mainly in the Midwest and West, according to the NAHB (see related graph at right). "Builders report solid demand for new single-family homes, but they're also grappling with affordability concerns stemming from a chronic shortage of construc- tion workers and buildable lots," said NAHB Chairman Greg Ugalde. "Ongoing job growth, favorable demographics and a low-interest-rate environment will help to modestly spark growth," added NAHB Chief Economist Robert Dietz. "However, supply-side headwinds will limit more robust growth," he cautioned. EXISTING-HOME SALES Current sales activity for existing homes is "underperforming in relation to the strength in the jobs markets" – in part because the impact of lower mortgage rates "has not yet been fully realized," the chief economist for the Washington, DC-based National Association of Realtors said last month. According to Lawrence Yun, the NAR was not surprised to see the recent retreat in exist- ing-home sales, which were most recently pegged at a seasonally adjusted annual rate of 5.21 million units. Sales as a whole are down 5.4% from their pace of a year ago, the NAR said, adding that a sustained, steady gain in home sales can occur only "when home price appreciation grows at roughly the same pace as wage growth." RESIDENTIAL REMODELING Residential remodeling is reportedly "strong" in many parts of the country due to insufficient home construction and an aging housing stock, although "it can be difficult to find skilled labor" for remodeling projects, the National Association of Home Builders reported last month. According to the latest "Remodeling Market Index" (RMI) issued by the NAHB, remodeling activity, while expanding at modest rates, should see slowing growth, given declining home-price appreciation and existing-home sales volume combined with rising construction costs (see related story below). Remodeling market activity, along with remodeler confidence, has remained in positive territory since the second quarter of 2013, according to the NAHB. APPLIANCE SHIPMENTS Domestic shipments of major home appli- ances, keyed by declines in nearly all major product categories, fell in March compared to the same month in 2018, according to the Association of Home Appliance Manufacturers. The Washington, DC-based AHAM reported last month that March appliance shipments totaled 7.96 million units, down 4.1% from the 8.30 million units shipped in March 2018. Year- to-date appliance shipments through March were down 4.3% from the same three-month period in 2018, AHAM said. Growth Rate for Home Remodeling Spending Seen Slowing CAMBRIDGE, MA — Annual gains in improve- ment and repair spending on owner-occupied housing stock are projected to continue decel- erating through early next year, according to the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. According to its latest forecast, released last month by the Cambridge, MA-based Joint Center, year-over-year growth in homeowner remodeling expenditures will slow to 2.6% from its current level of 7% by the first quarter of 2020. Cooling house price gains, home sales activity and remodeling permitting are among the factors lowering the expectations for resi- dential remodeling spending, according to Joint Center Managing Director Chris Herbert (see related story above). "Home improvement and repair spending has been in an extended period of above- trend growth for several years, due to weak homebuilding, aging homes and other fac- tors," observed Harvard researcher Abbe Will. "However, growth in remodeling is expected to fall below the market's historical average of 5% for the first time since 2013." Despite the slower-growth projections, Herbert said that more-favorable mortgage rates "could still give a boost to home sales and refinancing this spring and summer, which could help buoy remodeling activity." Housing Recedes in Face of Headwinds Supply-side headwinds continue to stunt growth in the housing market, although recent mort- gage-rate declines should provide a boost as 2019 unfolds, forecasters predict. Although demand is said to be strong, and builder confidence positive, single-family housing starts are off about 5% from a year ago – and down from the gains posted since 2014 (see related story at left). Source: National Association of Home Builders THE SLUGGISH, AND DECLINING, PACE OF SINGLE-FAMILY HOUSING STARTS Seasonally Adjusted Annual Rate in Thousands of Units 2014 2015 2016 2017 2018 January 2019 February 2019 648 715 782 849 876 970 805 8 Kitchen & Bath Design News • June 2019 BAROMETERS A LOOK AT KEY STATISTICS & TRENDS SHAPING THE INDUSTRY MARKET ANALYSIS

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