Kitchen & Bath Design News

AUG 2014

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Barometers { A look at key statistics & trends shaping the industry } 8 | Kitchen & Bath Design News August 2014 Housing Recovery Still Facing Key Challenges, Report Notes T h e h o u s i n g m a r - ket – including the k i t c h e n / b a t h a n d residential remodeling sec- tors – continues its gradual climb, although the ongoing recovery remains fragile and uneven. Among the key statis- tics and forecasts released in recent weeks by government agencies, research frms and industry-related trade asso- ciations were the following: HOUSING STARTS The National Association of Home Builders is still forecasting a 12% gain in housing construction for 2014, despite the fact that recent declines in both sin- gle- and multi-family starts have pushed nat ionw ide housing production down to a seasonally adjusted annual rate of just over 1 million units. However, ac- cording to David Crowe, ch ief econom ist for t he Wa s h i n g t o n , D C - b a s e d NA H B, t he encou rag i ng news is that single-family permits, generally viewed as an indicator of future build- ing activity, are up by almost 4%. The modest increase, Crowe said, is evidence that builders expect continued re- lease of pent-up demand and a gradual expansion of the market. "Builders continue to move carefully in adding inventor y," NA HB Cha ir- man Kevin Kelly observed, although "they are facing supply chain issues, such as access to lots and labor." EXISTING-HOME SALES Current sales activity is re- bounding after a "lackluster" frst quarter, with housing f u nd a ment a l s "show i ng slight improvement in mar- kets across the country," according to the National Association of Realtors. The Washington, DC-based NAR reported last month that existing-home sales were pegged at a seasonally ad- justed annual rate of 4.89 million, up from previous months but still 5% below the 5.15-million-unit level posted at the same time in 2013. "Home buyers are benefting from slower price growth due to much-need- ed rising inventory levels," said NAR Chief Economist Lawrence Yun. "Sales [are being] helped by the im- proving job market and the temporary but slight decline in mortgage rates." Rising invento- ry, Yun noted, "bodes well for slower price growth and greater afordability, but the amount of homes for sale is still modestly below a ba la nced market. Therefore, new home construc- tion is still needed to keep prices and hous- ing supply healthy in the long run." APPLIANCE SHIPMENTS Domestic shipments of major home ap- p l i a n c e s g a i n e d signif icant ground in June, with year-to-date fgures through the frst six months of 2014 well ahead of last year's numbers, ac- cording to the Association of Home Appliance Manu- facturers. The Washington, DC-based AHAM reported last month that June ap- pliance shipments totaled 7.50 million units, up 11.3% from the 6.75 million units shipped in June, 2013. Year- to-date shipments through June were up 3.9% over the total for the frst six months of 2013, AHAM said. CABINET & VANITY SALES Sales of kitchen cabinets and vanities continued their 2014 growth trajectory in May, 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 May sales of cabinets rose 7.5% over the same month in 2013. Sales of stock cabinets increased 15.8%, while semi-custom cabinet sales rose 0.6% and custom cabinet sales gained 3.7%, the KCMA said. Year- to-date sales through May were up 11.0% over the same fve-month period in 2013, the KCMA added. Housing Results Still Mixed In Face of Uneven Recovery MARKET ANALYSIS Cambridge, MA — The U.S. housing recovery should re- gain its footing but still faces a number of challenges, ac- cording to the annual "State of the Nation's Housing" re- port released recently by the Joint Center for Housing Stud- ies of Harvard University. "The housing recovery is following the path of the broader economy," said Chris Herbert, research director at the Cambridge, MA-based Joint Center for Housing Studies. "As long as the econ- omy remains on the path of slow but steady improvement, housing should follow suit." Nevertheless, tight credit, still-elevated unemployment and student loan debt among young Americans are mod- erating growth and keeping millennials and other frst- time homebuyers out of the market, according to Joint Center analysts. Although the housing in- dustry saw notable increases in construction, home prices and sales in 2013, household growth has yet to fully re- cover from the effects of the recession, the Joint Cen- ter said, adding that many young Americans, saddled with higher-than-ever stu- dent loan debt and falling incomes, continue to live with their parents, stunting household growth. St i ll, g iven t he sheer volume of young adu lt s coming of age, the number of households in their 30s should increase by 2.7 mil- lion over the coming decade, which should boost demand for new housing, the Joint Center said. Business conditions at residential architecture frms continue to show gains, even though the broader housing market recovery remains uneven, according to the American Institute of Architects. However, while all major residential sectors – with the exception of second and vacation homes – are improving, the pace of growth has slowed in some more than others, as refected in the graphic above. The trade-up and custom/luxury markets, for example, are seeing a fuller recovery. The frst-time buyer segment, in contrast, is witnessing a bumpier recovery. RELATIVE STRENGTH OF VARIOUS RESIDENTIAL CONSTRUCTION SECTORS % OF SURVEYED ARCHITECTS REPORTING INCREASES Source: American Institute of Architects 2014 2013 Kitchen & Bath Remodeling 57% 64% Remodeling Additions & Alterations 59% 56% Custom/Luxury Home Market 29% 37% Move-Up Homes 27% 33% Townhouse/Condo Market 15% 13% First-Time Buyer/Affordable Home Market 5% 13% Second/Vacation Home Market -9% -5%

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