Kitchen & Bath Design News

JAN 2014

Kitchen & Bath Design News is the industry's leading business, design and product resource for the kitchen and bath trade.

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Barometers { A look at key statistics & trends shaping the industry } 'Fragile' Recovery Seen Facing Key Challenges T he c u r rent housing recovery, while palpable and sustainable, remains fragile and continues to face signifcant challenges as 2014 gets underway, market analysts contend. Among the key statistics and forecasts released in recent weeks by government agencies, research frms and industry-related trade associations were the following: side bode well for a continuing, gradual upturn in housing," said NAHB senior economist Robert Denk. The Washington, DC-based NAHB warned, however, that consumer and builder confdence "could be seriously undermined unless policymakers make progress over looming budget, tax and economic policy issues." from its current level, but still faces the headwinds of limited inventory and falling afordability conditions. Yun pointed to "concerns" heading into 2014, including new mortgage rules that could delay the approval process, and another government shutdown. HOUSING STARTS EXISTING-HOME SALES A f lattening trend is expected for existing-home sales, although constrained inventory means home prices continue to see double-digit year-over-year gains, according to the National Association of Realtors. "The erosion in buy ing power is dampening home sales," said Lawrence Yun, chief economist for the Washington, DC-based NAR. "Moreover, low inventory is holding back sales while at the same time pushing up home prices in most of the country. More new-home construction is needed to help relieve the inventory pressure and moderate price gains." According to Yun, the market "could rebound a bit Domestic shipments of major home appliances rose again in October compared to shipments during the same month in 2012, according to the Association of Home Appliance Manufacturers. The Washington, DC-based AHAM reported last month that October appliance shipments totaled 4.62 million units, up 7.0% from the 4.32 million units shipped in October, 2012. Year-to-date shipments were up 4.1% for the first 10 months of 2013, compared to JanuaryOctober of 2012, AHAM reported. Despite the recent government shutdown, builders feel a housing recovery "is still underway," although the admitted "fragile" recovery still faces challenges, including uncertainty in Washington, tight credit conditions for home buyers and limited availability of labor and lots. That's according to the National Association of Home Builders, which last month cited recent gains in the issuance of building permits, particularly in the multi-family sector. "Permits are often a harbinger of future housing activity, and the strong showing in the multi-family sector along with stable numbers on the single-family APPLIANCE SHIPMENTS BUILDER PERCEPTIONS OF CURRENT & FUTURE MARKET CONDITIONS MONTHLY NAHB/WELLS FARGO HOUSING MARKET INDEX 6/05 57 1/06 1/07 1/08 1/09 1/10 1/11 1/12 8 19 15 16 35 25 1/13 11/13 47 72 58 Source: NAHB/Wells Fargo Housing Market Index (HMI) For the sixth consecutive month, more builders are viewing market conditions as 'good' rather than 'poor,' according to the latest monthly NAHB/Wells Fargo Housing Market Index, which held steady at 58 in November, 2013 (see related story below). The HMI, which gauges builder perceptions of current and future single-family home sales, hit its all-time high in June of 2005, when annual single-family housing starts exceeded 1.7 million units. The Index sunk to single-digit lows in 2009, when the housing market plunged to its nadir of 353,000 units, and has been rising steadily since then, as refected in the graph above. Sales of kitchen cabinets and vanities showed strong gains in October, rising 24.2% com- pared to the same month in 2012, 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 sales of stock cabinets rose 27.1%, while semi-custom sales increased 21.8% and custom cabinet sales gained 21.1%. Year-to-date sales through October were up 20.1% compared to the same ten-month period last year, the KCMA reported. Washington, DC — For the sixth consecutive month, more of the nation's builders are viewing market conditions as "good" rather than "poor," the National Association of Home Builders reported last month. Commenting on the eve of next month's International Builders' Show (IBS) and Kitchen & Bath Industry Show (KBIS), to be held in Las Vegas, the Washington, DC-based trade association said that the latest monthly NAHB/Wells Fargo Housing Market Index (HMI) held steady at 58 (see related graph above). Derived from a monthly survey, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate trafc of prospective buyers as "high to very high," "average" or "low to very low." Scores from each component are then used to calculate a seasonally adjusted index. Any number over 50 indicates that more builders view conditions as good than poor. "Policy and economic uncertainty is undermining consumer confdence," said NAHB Chief Economist David Crowe. "The fact that builder confdence remains above 50 is an encouraging sign, considering the unresolved debt and federal budget issues that cause builders and consumers to remain on the sideline." CABINET & VANITY SALES MARKET ANALYSIS Home Builder Perception Of Market Holding Steady, Despite Challenges 10 | Kitchen & Bath Design News January 2014

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