Kitchen & Bath Design News

JAN 2015

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 } 12 | Kitchen & Bath Design News January 2015 Economic & Housing Indicators Continue Their Upward Path Housing Seen 'Revving Up' As Economy Grows in 2015 T hings are looking up for 2015, with most economic and hous- ing indust r y barometers continuing to strengthen, ac- cording to market analysts. Among the key statistics and forecasts released in recent weeks by government agen- cies, research firms and industry-related trade asso- ciations were the following: HOUSING STARTS The recent rise in single-fam- ily housing starts "is more proof that the economy is frming and consumer conf- dence is growing," according to Kevin Kelly, chairman of the National Association of Home Builders, which is pre- dicting continued upward momentum in 2015. The latest government fgures pegged total housing starts at a sea- sonally adjusted annual rate of 1.009 million units, with single-family housing produc- tion at its highest level since November, 2013. At the same time, markets in 59 of the ap- proximately 350 metro areas nationwide returned to or ex- ceeded their last normal levels of economic and housing activity in the third quarter of 2014, according to the Washington, DC-based NAHB. "The markets are recovering at a slow, gradual pace," Kelly said. "Continued job creation, economic growth and increas- ing consumer confidence should help spur pent-up de- mand for housing." EXISTING-HOME SALES Existing-home sales are ex- pected to be higher in 2015, and prices will remain at a healthier level of growth that benefits both buyers and sellers, according to the latest forecast by the National Association of Re- altors. "The improving job market has consumers feel- ing more confdent, and the rebound in home prices is building household wealth and giving homeowners the ability to sell," said Lawrence Yun, chief economist for the Washington, DC-based NAR. Existing-home sales in 2014 are expected to total 4.9 mil- lion units, slightly below the 5.1 million level achieved in 2013, but are being forecast to rise to 5.3 million in 2015 and 5.4 million in 2016. De- spite the upbeat forecast, however, Yun said that factors such as inventory shortages and tight lending standards "will likely hold back the housing market from reach- ing its full potential." APPLIANCE SHIPMENTS D ome st ic sh ipment s of major home appliances con- tinued their upward path in November of 2014, with year-to-date fgures through the frst 11 months of last year comparing favorably to the previous year's numbers, according to the Association of Home Appliance Manu- facturers. The Washington, DC-based AHAM reported last month that November 2014 appliance shipments totaled 5.20 million units, up 4.1% from the 4.99 million units shipped in November 2013. Yea r-to-date ship- ments through November were up 5.0% over the total for the first 11 months of 2013, AHAM said. CABINET & VANITY SALES Sales of kitchen cabinets and vanities again saw an increase in October, as they did throughout 2014, the Kitchen Cabinet Manufac- turers Association said last month. According to the Reston, VA-based KCMA, manufacturers participat- i ng i n t he a s sociat ion's monthly "Trend of Business" survey reported that October sales of cabinets and vani- ties rose 5.5% over October 2013. Sales of stock cabinets rose 6.8%, while semi-cus- tom cabinet sales gained 2.9% and custom cabinet sales increased 14.0%, the KCMA reported. Year-to- date sales through October were up 9.6% over the same 10-month period in 2013, the KCMA added. MARKET ANALYSIS Washington, DC — A growing economy, rising household formations, low mort- gage rates and pent-up demand will help single-family housing production "to rev up" in 2015, while a growth in renters will keep the multi-family market "at cruising altitude or higher," according to economists associated with the recent National Association of Home Builders' 2014 Fall Construction Forecast. "Single-family builders are feeling good – not overly confdent, but conf- dent enough to keep moving forward," said NAHB Chief Economist David Crowe, who added that the single-family sector will fnish out 2014 much stron- ger than it began, setting the stage for "a robust" 2015. "This is mostly due to signifcant pent-up demand and steady job and eco- nomic growth that will allow trade-up buyers who have delayed home pur- chases due to job insecurity to enter the marketplace," said Crowe. According to Mark Zandi, chief econo- mist at Moody's Analytics, prospects are good for continued gains in overall eco- nomic and housing activity, based largely on current and projected job growth. "The housing market will be fine because of better employment, higher wages and solid economic growth, which will trump the efect of higher mortgage rates," Zandi said. The NAHB is forecasting a 2014 to- tal of 991,000 housing starts, up 6.6% from the 930,000 units started in the previous year. Single-family produc- tion in 2014 is expected to rise 2.5% to 637,000 units, increase an additional 26% in 2015, to 802,000, and reach 1.1 million units in 2016 (see related Fore- cast 2015 coverage, Page 74). The Washington, DC-based trade as- sociation is also forecasting that, when the fnal numbers are in, residential remodeling will have posted a 3.4% de- cline in 2014 over the previous year, due in large part to slow activity in the frst quarter caused by an unusually harsh winter throughout much of the nation. Residential remodeling activity is expected to rise 2.7% in 2015, and an additional 1.3% in 2016, the NAHB said. 3% Decline in Excess of 10% vs. 2013 5% Increase in Excess of 50% 7% Increase of 25%-49% 5% Decline of 5%-9% 20% Increase of 5%-9% 22% Increase of 10%-24% 38% About the Same as 2013 PROJECTIONS FOR YEAR-END 2014 REMODELING REVENUE % OF SURVEYED FIRMS BY PROJECTED REVENUE CHANGE VS. 2013 The nation's residential remodelers apparently had a mixed year in 2014, although most surveyed frms reported revenue growth compared to the previous year. As refected in the graphic above, the majority of companies reporting growth in a recent survey by the Joint Center for Housing Studies at Harvard University said the increases were between 5% and 24%. Source: Joint Center for Housing Studies, Harvard University

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