Kitchen & Bath Design News

AUG 2015

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8 | Kitchen & Bath Design News | August 2015 Barometers { A look at key statistics & trends shaping the industry } Homeownership Rate Dips in Face of Higher Rental Demand MARKET ANALYSIS Market Posts Gains, But in Fits & Starts T he nation's housing and re- modeling markets continue to post gains as 2015 moves into its second half, although the on- going recovery remains fragile and uneven. Among the key statistics and forecasts released in recent weeks by government agencies, research frms and industry-related trade associa- tions were the following: HOUSING STARTS An uptick in housing permits demon- strates that "builders are optimistic that more consumers are returning to the market" despite a recent dip in production, the National Asso- ciation of Home Builders said last month. Even with recent ups and downs in housing starts, "it should be a solid year for home building," said Tom Woods, chairman of the Washington, DC-based NAHB. Al- though housing starts declined, according to the latest numbers, per- mit issuance rose to a rate of 1.275 million units, the highest level since August 2007, the NAHB noted. The housing start and permit fgures for the second quarter "are shaping up to be stronger than the frst," said NAHB Chief Economist David Crowe, who added that the upward trajec- tory, coupled with positive sales, is in line with "growing builder con- fdence that indicates a continual recovery of the housing market." EXISTING-HOME SALES Fueled partly by an increase in activity among frst-time buyers, ex- isting-home sales have increased to their highest pace in nearly six years, while pending home sales are now at their highest level in more than nine years, the National Association of Realtors reported last month (see graphics, at right). "The return of frst-time buyers in May is an encour - aging sign and is the result of multiple factors, including strong job gains among young adults, less expensive mortgage insurance and lenders of- fering low down-payment programs," said Lawrence Yun, chief economist for the Washington, DC-based NAR. Yun warned, however, that overall supply still remains tight and price growth in many markets continues to teeter at or near double-digit ap- preciation – "an unhealthy pace." CABINET & VANITY SALES Sales of kitchen cabinets and vanities continued their 2015 gains in May, rising over sales in the same month in 2014, the Kitchen Cabinet Manu- facturers 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 and vanities increased 5.7% over May of 2014. Sales of stock cabinets fell 1.0%, semi-custom cabinet sales gained 13.0% and custom cabinet sales rose 4.2%, the KCMA said. Year- to-date sales through May were up 6.4% compared to the same fve-month period last year, the KCMA added. APPLIANCE SHIPMENTS Domestic shipments of major home appliances, led by a sharp increase in the cooking category, rose in June compared to shipments in June of last year, according to the Association of Home Appliance Manufacturers. The Washington, DC-based AHAM reported last month that June 2015 appliance shipments totaled 7.56 million units, up 5.9% from the 7.13 million units shipped in June, 2014. Year-to-date shipments for the frst six months of 2015 were up 5.8% over January-June shipments in 2014, AHAM said. Cambridge, MA — The fedgling U.S. housing recovery lost momentum last year as homeownership rates continued to fall, single-family construction remained near historic lows and existing-home sales cooled, concludes "The State of the Nation's Housing" report, released in June by the Joint Center for Housing Studies of Harvard University. "Perhaps the most telling indicator of the state of the nation's housing is the drop in the homeownership rate to just 64.5% last year," said Chris Herbert, managing director of the Cambridge, MA-based Joint Center. The homeownership decline, Herbert said, erases nearly all of the increase from the previous two decades. "In fact, the number of homeowners fell for the eighth straight year, and the trend does not appear to be abating," he commented. The fip side of falling homeownership rates has been exceptionally strong demand for rental housing, the Joint Center reported. And, while soaring demand is often at- tributed to the millennials' preference to rent, households aged 45–64 actually accounted for about twice the share of renter growth as households under the age of 35. Simi- larly, households in the top half of the income distribution, although generally more likely to own, contributed 43% of the growth in renters. The Joint Center also noted that the national vacancy rate fell to its lowest point in nearly 20 years, adding that "if job growth continues to pick up, we could see even more demand, as young adults increasingly move out of their parents' homes." Fueled by a growing economy and increase in activity among frst-time buyers, existing-home sales have increased to their highest pace in nearly six years, while pending home sales are now at their highest level in more than nine years, according to the National Association of Realtors. The graphics above refect the growth in both indices since 2012. Source: National Association of Realtors EXISTING AND PENDING HOME SALES CONTINUE TO PACE HIGH 0 1 2 3 4 5 6 Existing-Home Sales Seasonally Adjust Annual Rate in Millions 4.66 5.09 4.94 5.35 2012 2013 2014 2015 YTD 0 20 40 60 80 100 120 Pending Home Sales Index 99.9% 104.9% 100.8% 112.6% 2012 2013 2014 2015 YTD

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