Kitchen & Bath Design News

MAR 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 } 8 | Kitchen & Bath Design News | March 2015 H ou si ng r e su lt s for 2014 proved somewhat spotty – characteristic of a market undergoing a sluggish re- covery – although generally improved over the previous year, according to the latest round of market indicators. 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 With continued job creation and a growing economy, sin- gle-family housing production "should make gains in the year ahead," the chief economist for the National Association of Home Builders said last month. According to David Crowe of the Washington, DC-based NAHB, after a solid growth year in 2014, it was "not surprising" to see a slight, weather-related pullback in January, a month that saw nationwide housing starts fall 2%. Led by solid gains in single- family production, nationwide housing starts had risen to a seasonally adjusted annual rate of 1.089 million units in December, 2014, the frst time since 2007 that starts had ended the year above 1 million units, the NAHB said. "We expect this momentum to carry forward," said Crowe. "A growing labor market and strengthening economy will spur steady growth in single- family housing production in the year ahead." EXISTING-HOME SALES Existing-home sales declined in 2014 from the previous year, although median home prices rose to their highest level since 2007, the Nation- al Association of Realtors announced last month. Ac- cording to the Washington, DC-based NAR, 4.93 million existing homes were sold in 2014, a 3.1% decline from the 5.09 million resales posted in 2013. However, the national median existing-home price was $208,500, the highest since 2007 and a 5.8% in- crease from 2013, the NAR reported. "Home sales im- proved over the summer once inventory increased, prices moderated and economic growth accelerated," said NAR Chief Economist Lawrence Yun. "Sales were measurably better in the second half, up 8% compared to the frst six months of the year." RESIDENTIAL REMODELING As the broader housing mar- ket continues its sluggish recovery, growth in home improvement spending is also expected to soften throughout the coming year, according to the latest Lead- ing Indicator of Remodeling Activity (LIRA), released by the Remodeling Futures Pro- gram at the Joint Center for Housing Studies of Harvard University. The LIRA projects that annual growth in home improvement spending will decelerate from a rate of 6.3% in the frst quarter of 2015 to a rate of 1.6% by the third quarter (see related graph, below) . "Due in part to weak- ening home sales last year, growth in remodeling spend- ing is expected to deflate somewhat in 2015," said Chris Herbert, managing director of the Cambridge, MA-based Joint Center. "Homeowner- ship rates continue to slide as lending remains tight and first-time homebuy- ers are not yet returning to the market," Herbert added. "Although contractor senti- ment has cooled in recent quarters, it remains favor- able overall," observed Abbe Will, a research analyst in the Remodeling Futures Program at the Joint Center. "House price gains are mod- erating but [are] still strong, and home sales appear to be turning a corner now, all of which bodes well for contin- ued, if more moderate, home improvement gains for 2015." LAS VEGAS — A sizeable minority – some 40% – of homeowners who've undertaken a kitchen remodel in the past 12 months report they'd spend more money on the project if they had to do it over again. That fnding was among a number of research conclusions conveyed to leading manufacturers and ad agency representa- tives during a breakfast event conducted during January's Kitchen & Bath Industry Show (KBIS) in Las Vegas. The event was co-sponsored by Kitchen & Bath Design News , the Research Institute of Kitchen & Cooking Intelligence (RICKI) and Wray Ward, a Charlotte, NC ad agency with cli- ents in the residential market. According to the Charlotte, NC-based RICKI, which presented data from several of its recent market studies, some 1,000 homeowners who have remodeled their kitchens within the previous 12 months were asked if they'd spend more if they could undertake their project again. Kitchen designers, said RICKI Re- search Director Riley Kirby, "are probably leaving money on the table." Part of that, Kirby said, "is budget fright and homeowners feeling they need to settle for brands, products or materi- als – and, consequently, not getting their dream kitchen." Kirby suggested that kitchen de- signers position remodeling projects so that clients "think of the value they're getting. "Ask clients to think of a car pur- chase," Kirby said, "and then ask them: If you had to wait 30 years before you could change anything major, would you skimp or spend a little more? "Something like that," he said, "could well work." Kitchen Remodel Customers Seen Leaving Money, and Profts, on The Table MARKET ANALYSIS 2014 Results Spotty, Though Largely Positive THE SLOWING PACE OF GROWTH IN RESIDENTIAL REMODELING Growth in home improvement spending, which has posted consistent monthly gains over the past two years, is expected to soften as 2015 unwinds and the broader housing market continues its slug- gish recovery. As seen in the graph above, the latest Leading Indicator of Remodeling Activity (LIRA), released last month by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University, projects that annual growth in home remodeling spending will decelerate from a rate of 6.3% in the frst quarter of 2015 to 1.6% by the third quarter (see related story, above) . Source: Joint Center for Housing Studies, Harvard University 6.8% 6.3% 3.3% 1.6% 7.1% 7.7% 7.7% 5.3% 4.2% 2.3% 5.0% 1st Qtr 1st Qtr 1st Qtr 2nd Qtr 2nd Qtr 2nd Qtr 3rd Qtr 3rd Qtr 3rd Qtr 4th Qtr 4th Qtr 2 0 1 3 2 0 1 4 2 0 1 5

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