Kitchen & Bath Design News

JUL 2019

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WHILE LABOR SHORTAGES, aord- ability issues and other challenges persist, hous- ing and remodeling industry analysts continue to predict a slow, steady ascent through the balance of . Among the key statistics and forecasts released in recent weeks by govern- ment agencies, research rms and industry- related trade associations were the following: HOUSING STARTS While builders remain cautious due to aord- ability concerns, expectations are that potential new-home buyers "will respond to lower interest rates and the housing market will continue on a slow, steady climb," Greg Ugalde, chairman of the National Association of Home Builders, said last month. Total housing starts were pegged at a seasonally adjusted annual rate of . million units, but "soft" permit numbers for single-family housing reect builder "concerns about housing aordability and construction costs," said Robert Dietz, chief economist for the Washington, DC-based NAHB. RESIDENTIAL REMODELING The ongoing shortage of skilled labor and subcontractors continues to be a major concern for residential remodelers, who are vying to keep their prices competitive while dealing with the increasing costs of labor, a National Association of Home Builders survey found. According to the third-quarter poll whose results were released last month, roughly % of surveyed remodelers reported shortages of workers avail- able to perform nished or rough carpentry, and nearly half (%) termed the shortages as serious. "Although these percentages are down slightly from a year earlier, they remain seriously elevat- ed," the NAHB said, adding that labor shortages were reported in of categories surveyed (see related graph, above right). The most common eects of the shortages have been causing remodelers to pay higher wages, forcing them to raise prices to customers and making it dicult to complete projects on time, the NAHB said. EXISTING-HOME SALES Continued economic expansion, rising home sales and an increase in wage growth that's on par with home price growth are being project- ed for the second half of , according to a consensus of experts at a real-estate forum sponsored in May by the National Association of Realtors. "Home sales should be much stronger based on the economic fundamentals of jobs, interest rates, population and consumer con- dence," said Lawrence Yun, chief economist for the Washington, DC-based NAR. After several years of wage growth outpacing home price growth, both are more closely aligned this year, Yun noted. "This shift is a healthy development toward keeping housing aordability stable." While existing-home sales are down .% from a year ago, "we are seeing historically low mortgage rates combined with pent-up demand, so buyers will look to take advantage," Yun predicted. APPLIANCE SHIPMENTS Domestic shipments of major home appliances, impacted by declines in all key product catego- ries, fell sharply in April compared to the same month in , according to the Association of Home Appliance Manufacturers. The Washington, DC-based AHAM reported last month that April appliance shipments totaled . million units, down .% from the . million units shipped in April . Year-to-date appliance shipments through April were o .% from the same four-month period in , AHAM said. Residential Remodeling Pros Seen as 'Optimistic' in Short Term PALO ALTO, CA — Residential remodeling professionals are "upbeat" regarding short-term business conditions, according to the latest "Renovation Barometers" issued by Houzz Inc. The Palo Alto, CA-based online platform for home remodeling and design last month released its Q Houzz Renovation Barometer, which tracks residential renovation market expecta- tions, project backlogs and recent activity among businesses in the nation's construction and architectural/design services sectors. The quar- terly indicator "points to optimism among home renovation professionals for business activity in the second quarter of the year," Houzz reported. "This year's residential renovation activity is already looking very dierent from those of ," said Nino Sitchinava, principal economist for Houzz. "Professional sentiments for the rst quarter were considerably more tempered, and businesses are starting the second quarter with much shorter backlogs relative to a year ago." According to Sitchinava, surveyed remodeling professionals attributed rst-quarter sluggishness to unusually cold and wet weather conditions, in addition to consumer apprehension caused by the government shutdown, tax refund uncertainty and the high costs of products and materials. Houzz said its latest Renovation Barometer revealed upticks in project inquiries, new com- mitted projects and expected business activity. 'Slow, Steady Climb' Seen for Housing The most common eects of ongoing labor shortages have been in causing remodelers to pay higher wages and subcontractor bids, forcing firms to raise prices to customers and making it more dicult to complete projects on time. Labor shortages have also been causing remodeling firms to turn down some projects, a trend that's also prevalent among home builders. Source: National Association of Home Builders THE IMPACT OF LABOR SHORTAGES ON REMODELERS' BUSINESSES Percent of Firms Surveyed in Quarter 3, 2018 Higher Wages/Subcontractor Bids Higher Prices for Customers Diculty Completing Projects on Time Turning Down Some Projects Slowed Rate of Accepting Orders Making Some Projects Unprofitable Seeking Labor from Wider Geography Lost/Cancelled Sales 78% 72% 67% 53% 42% 41% 37% 32% 8 Kitchen & Bath Design News • July 2019 BAROMETERS A LOOK AT KEY STATISTICS & TRENDS SHAPING THE INDUSTRY MARKET ANALYSIS

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