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/391330
Barometers { A look at key statistics & trends shaping the industry } 8 | Kitchen & Bath Design News October 2014 W ith the housing market continu- ing its gradual recovery, growing in month- ly fts and starts, evidence continues to mount that the deepest wounds to the mar- ket sufered during the Great Recession are fnally begin- ning to fully heal. 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 The return to production levels of more than one mil- lion housing starts "confrms that consumer confidence continues to improve and that, propelled by a healthi- er economy, more and more people are feeling ready to buy a home," the National As- sociation of Home Builders said last month. According the latest fgures from the U.S. Census Bureau a nd HUD, nationwide housing starts were pegged at a sea- sonally adjusted annual rate of 1.093 million units, which is the highest level since November of 2013. The gains were fueled by strong single- and multi-family growth, said the Washington, DC- based NAHB. "We should continue to see a gradual, consistent recovery through- out the rest of the year," said NAHB Chief Economist David Crowe, who added that "the economic fundamentals are in place for an ongoing hous- ing recovery." NEW HOME SALES Builder confdence appears to be on the rise despite t he repor ted recent de- cline in sales of newly built, single-family homes – a de- velopment that "surprised" the National Association of Home Builders, particularly in the face of rising housing starts and continued low mortgage interest rates that are being seen. The NAHB reported last month that builders are continuing to increase their level of in- ventory in anticipation that sales will gradually improve during the rest of the year and into 2015. Current mar- ket conditions "should help spur pent-up demand," the NAHB added. EXISTING-HOME SALES Existing-homes sales are now bei ng projected to be down 2.1% this year, to 4.98 million, compared to 5.09 million in 2013, the ch ief econom ist for t he National Association of Re- altors said last month (see related table, above). De- spite the projected decline, however, "sales momentum is slowly building behind stronger job growth and improving inventory condi - tions, said Lawrence Yun, ch ief econom ist for t he Washington, DC-based NAR. "The number of houses for sale is higher than a year ago and tamer price increases are giving prospective buy- ers less hesitation about entering the market," Yun observed. "More people are buying homes compared to earlier in the year, and this trend should continue with interest rates remaining low and apartment rents on the rise." Yun warned, however, that afordability is likely to decline in upcoming years. "Although interest rates have fallen in recent months, me- dian family incomes are still lagging behind price gains, and mor tgage rates will inevitably rise with the up- coming changes in monetary policy," the economist said. CABINET & VANITY SALES Sales of kitchen cabinets and vanities continued to ma ke posit ive st rides in July, as they have through- out all of 2014, the Kitchen Cabinet Manufacturers As- sociation said last month. According to the Reston, VA-ba se d KCM A , ma nu- facturers participating in the association's monthly "Trend of Business" survey reported that July sales of cabinets and vanities rose 7.3% over the same month in 2013. Sales of stock cabi- nets increased 7.4%, while semi-custom cabinet sales gained 6.3% and custom cabinet sales rose 11.9%, the KCMA said. Year-to-date sales through July were up 11.0% over the same seven- month period in 2013, the KCMA added. Recession-Bred Wounds Continue to Heal Housing Afordability Remaining A Positive Force MARKET ANALYSIS Washington, DC — The latest figures regarding nation- wide housing afordability "refect the slow but steady march toward the historic levels of price appreciation and interest rates that re- sult in affordability levels we experienced before the mid-2000s boom." So says David Crowe, chief economist for the National Association of Home Builders, who noted last month that, while the housing market witnessed a slight decrease in afordability in the second quarter, "it is still fairly high by historical standards." According to the latest fgures from the Washington, DC-based NAHB, 62.6% of new and existing homes sold in the second quarter were af- fordable to families earning the U.S. median income of $63,900. This is down from the 65.5% of homes sold that were afordable to median- income earners in the frst quarter. The national me- dian home price rose from $195,000 in the frst quarter to $214,000 in the second quarter. Meanwhile, aver- age mortgage interest rates dipped from 4.57% to 4.44% in the same period. "The deepest housing wounds suffered during t he Great Recession are beginning to fully heal," said Lawrence Yun, chief economist for the National Association of Realtors. "Ris- ing home values are helping owners recover equity, while strong job creation is as- sisting those who may have fallen behind on their mort- gage due to unemployment or underemployment." Despite occasional setbacks and lingering fragility, the nation's housing market is expected to continue its steady recovery at least into 2015, as refected in the table above. According to analysts, positive housing momentum is being fueled primarily by stronger job growth, a rise in consumer and builder confdence and improving inventory conditions. Afordability, however, is likely to decline in upcoming years, with median family incomes lagging behind home price gains and rising mortgage rates. LATEST FORECAST FOR KEY HOUSING MARKET INDICES Source: National Association of Realtors 2013 2014 (projected) 2015 (forecast) Housing Starts $ 925,000 $ 1.07 million $ 1.4 million New-Home Sales $ 430,000 $ 510,000 $ 710,000 Existing-Home Sales $ 5.09 million $ 4.98 million $ 5.20 million Median House Price $ 197,000 $ 209,000 $ 219,000 30-Year Mortgage Rate 4.0% 4.7% 5.5% Dollar Volume Estimate +21% +3% +11%