Kitchen & Bath Design News is the industry's leading business, design and product resource for the kitchen and bath trade.
Issue link: http://kitchenbathdesign.epubxp.com/i/186162
Barometers { A look at key statistics & trends shaping the industry } Market Seen Poised For New Growth C hanges in housing affordability, as much as any single factor, continue to impact the nation's housing market, which seemingly remains in line for continued, gradual strengthening, analysts said last month. Among the key statistics and forecasts released in recent weeks by government agencies, research frms and industry-related trade associations were the following: HOUSING STARTS Home builders "are making every efort to keep up with the rising demand for new homes and apartments," while construction in both sectors is running well ahead of the pace of a year ago, the National Association of Home Builders said last month. According to David Crowe, chief economist for the Washington, DC-based NAHB, nationwide housing starts – pegged at a seasonally adjusted annual rate of 896,000 units, according to the latest available figures – are in line with the association's forecast "for continued, gradual strengthening of housing starts and permit activity" through the balance of 2013. EXISTING-HOME SALES The recent rise in mortgage interest rates provided strong incentive for closing deals, and provided a boost to the market for existing homes, but further rate increases "will diminish the pool of eligible buyers" and prove a drag on the resale market, the National Association of Realtors said last month. According to the Washington, DC-based NAR, changes in afordability are impacting the market, but despite projections for higher mortgage interest rates, "compensating factors" can nevertheless sustain a continued recovery. "Although housing afordability conditions will become less attractive, jobs are being added to the economy, and mortgage underwriting standards should normalize over time from current stringent conditions as default rates fall," noted NAR chief economist Lawrence Yun. Existing-home sales, pegged at a seasonally adjusted annual rate of 5.39 million units, LEADING INDICATOR OF REMODELING ACTIVITY FOUR-QUARTER MOVING RATE OF CHANGE -1.5 +0.3 +6.3 +8.4 +9.0 +7.4 +6.2 +4.2 +4.5 +8.6 +14.9 +19.8 +17.2 have remained above year-ago levels for 25 months, according to the NAR. APPLIANCE SHIPMENTS Domestic shipments of major home appliances rose marginally in July compared to sh ipment s dur i ng the same month in 2012, according to Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 the Association of Home Appl ia nce 2011 2012 2013 2014 Manufacturers. The General strengthening in the housing market over the past Washington, DC-based 18 months is translating into increased spending on home AHAM reported last improvements, refected above in the projected quarterly rate of month that July apchange through the frst quarter of 2014. According to analysts, pliance shipments remodeling contractors have been reporting improving market totaled 4.54 million conditions for the past four quarters, and are seeing strength in units, up 1.1% from future market indicators, while spending trends have been on a the 4.49 million units solid upward slope (see Market Analysis, below). shipped in July, 2012. Year-to-date shipSource: Joint Center for Housing Studies, Harvard University ments were up 2.7% for the first seven months of 2013, compared to 27.9% compared to the same that sales of stock cabinets January-July of 2012, AHAM month in 2012, the Kitchen rose 35.1%, while semireported. Cabinet Manufacturers Ascustom sales gained 23.9% sociation said last month. and custom cabinet sales inCABINET & According to the Reston, creased 10.6%. Year-to-date VANITY SALES VA-based KCMA, manufacsales through July were up Sales of kitchen cabinets and turers participating in the 17.7% compared to the same vanities continued to post sigassociation's monthly "Trend seven-month period last year, nifcant gains in July, rising of Business" survey reported the KCMA reported. MARKET ANALYSIS Remodeling Spending Seen Rising Through Early 2014 10 | Kitchen & Bath Design News October 2013 Cambridge, MA — General strengthening in the housing market over the past 18 months is translating into increased spending on home improvements, according to the latest "Leading Indicator of Remodeling Activity" (LIRA), released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. According to Joint Center analysts, remodeling contractors have been reporting improving market conditions for the past four quarters, and are seeing strength in future market indicators. Spending trends have been on a solid upward slope, with the LIRA projecting continued strengthening of the market through the end of this year and into the frst quarter of 2014 (see related graph, above right, and story, Page 11). "Homeowners are more comfortable investing in their homes right now," said Eric Belsky, managing director of the Joint Center. "Consumer confidence scores are back to pre-recession levels, and since recent homebuyers are traditionally the most active in the home improvement market, the growth in sales of existing homes is providing more opportunities for these improvement projects." However, with housing starts leveling of in the second quarter and fnancing costs beginning to rise, "we may be seeing the beginning of more measured growth in the residential markets," added Kermit Baker, director of the Remodeling Futures Program at the Joint Center. "Given normal timing patterns, this suggests that the pace of growth for home improvement spending should begin to moderate as we move into 2014," Baker said.