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Economic experts and kitchen and bath dealers and designers are optimistic for 2016, projecting a continuation of the slow but steady growth seen in 2015. BY KIM BERNDTSON Positive Outlook s 2015 wrapped up on a strong note, the kitchen and bath design industry can look forward to more good news in 2016. That's according to experts in the kitchen and bath industry, home building and remodeling and real estate markets who recently shared their insights with KBDN. "We are cautiously optimistic," says Bill Darcy, CEO of the Hackettstown, NJ-based NKBA. "We are projecting 2016 to be much the same as 2015 for kitchen and bath projects…that is to say growth will continue, slowly, based on housing starts increasing about 7% to just under 1.2 million new homes." Much of the enthusiasm is based on the expectation of a 2% growth in GDP and about 2.5 million new jobs for 2016, notes Darcy. "With growth, comes jobs," he says. "Over the last few years, there has been such inconsistency and it's been a long time for our members to feel any sort of stability, but now some consistency is being established." Danielle Hale, managing director of housing statistics for the Chicago-based National Association of Realtors, adds that while 2015 showed a bit of a slowdown compared to 2014 – about 2.4 million new jobs versus about 3 million – job growth in 2016 looks to continue at a good pace. That translates to an increase in existing-home sales, she notes, which were forecasted to fnish 2015 at a pace of 5.3 million. "We expect 2016 to be around 5.4 to 5.5 million," she says. "We also saw that coupled with a pretty healthy increase in the median price of homes. "There is a bit of a delay between job growth and its transla- tion into existing-home sales," she adds. "People generally need to be in a position for a little while to feel comfortable with job security and stability and to feel comfortable with the income they are receiving. Banks like to see a good bit of income history as well, so we usually see a bit of delay. But now that we've had several years of job growth over 2 million, that is leading to the increased sales we see now. We are expecting good things out of the 2016 housing market." That's good news for the kitchen and bath industry, Hale continues. "Data shows that when people are moving, imme- diately after a home purchase is a good time to tackle home renovation projects," she notes. "We fnd people are spending additional money then. The fact that home sales are forecast to increase in 2016 is good for the home design market." Stars of the recovery continue to be remodeling and multi-family housing, both of which are expected to continue to grow this year, albeit at a bit slower pace due in large part to their relative success in recent years. David Pekel, national secretary of the Des Plaines, IL-based NARI, and president/CEO of Pekel Construction & Remodeling in Milwaukee, WI, references Harvard University's Joint Center for Housing Studies report that shows remodeling in 2015 actually slightly exceeded 2007, the industry's peak. "In 2007, remodeling expenditures were about $324 billion," he says. "We're at about $326 billion for 2015. We have seen an uptick in home improvement expenditures and there is a projection of another modest increase into 2016 as well 2017. Indicators point in the direction that the recovery is complete." Kermit Baker, senior research fellow, Harvard University's Joint Center for Housing Studies, also sees remodeling spend- ing continuing to grow, most likely in the mid-single-digit range for the next few years. "That is healthy, sustainable growth, given that it has regained its previous high," he says. Like the remodeling sector, multi-family housing is a bright spot, although Bob Denk, senior economist at the Washington, DC-based NAHB, expects it to slow in 2016, in large part because its recovery is back on track. "It's between 300,000 and 400,000 units per year," he says. "That's pretty much where we spent the 10 years before the crisis and that seems to be a sustainable pace." The largest expected area of growth is anticipated to be in single-family homes, which has been slower to recover, and therefore, has the greatest strides to make. Denk expects this sector to pick up in 2016, and even into 2017. "We are above 700,000 new homes, which is pretty good compared to the 647,000 new homes in 2014, but it still only rep- resents a little more than halfway back to normal," he says. A FORECAST FOR TOTAL HOUSING STARTS (Thousands of Units) 2011 Source: National Association of Home Builders 2012 2013 2014 2015 2016 2017 612 784 928 1,001 1,119 1,255 1,519 70 Kitchen & Bath Design News • January 2016 FORECAST 2016