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SOLID FUNDAMENTALS, evident as 2016 draws to a close, should contin- ue to bolster housing production – while aiding residential remodeling and kitchen/bath market growth – through next year, housing analysts are predicting. Among the key statistics and fore- casts released in recent weeks by government agencies, research firms and industry-related trade associations were the following: HOUSING STARTS Single-family housing production and permit issuance are posting "solid gains" despite a recent decline in housing starts, the result of a sharp dip in multi-family production, according to the National Association of Home Builders. The Washington-based NAHB reported last month that single-family starts are "consistent with builder sentiment, which has remained firm in recent months." Single-family starts, according to the latest figures, were pegged at a seasonally adjusted annual rate of 783,000 units, while multi-family production was run- ning at a pace of 264,000 units. Overall permit issuance, considered a harbinger of future activity, was running at a seasonally adjusted annual rate of 1.23 million units, according to the NAHB, which also reported recent gains in sales of newly built, single-family homes. EXISTING-HOME SALES First-time buyers are increasingly impacting the market for existing homes and currently represent more than one-third of all buyers, a high-water mark not seen in more than four years, according to the National Association of Realtors. The Washington-based NAR report- ed last month that a recent rebound in exist- ing-home sales, to a seasonally adjusted annual rate of 5.47 million, was propelled by sales to first-time buyers, who attained a 34% market share with 2016 drawing to a close. "Market fundamentals, primarily consistent job gains and affordable mortgage rates are there for the steady rise in first-timers needed to finally reverse the decline in the homeownership rate," said NAR chief economist Lawrence Yun. CABINET & VANITY SALES Sales of kitchen cabinets and vanities rose marginally in September, compared to the same month in 2015, the Kitchen Cabinet Manufacturers Association said last month. According to the Reston, VA-based KCMA, manufacturers participating in the associa- tion's "Trend of Business" survey reported that September sales of cabinets and vanities rose 0.6% over September of 2015. While semi-custom cabinet sales increased 3.0% and custom cabinet sales gained 4.8%, sales of stock cabinets declined 2.4% for the month, the KCMA said. Year-to-date sales for the first nine months of 2016 were up 5.3% over sales for January-September of last year, the associa- tion added. APPLIANCE SHIPMENTS Domestic shipments of major home appliances rose in September, while continuing to main- tain an edge over year-to-date shipments during the previous year, according to the Association of Home Appliance Manufacturers. The Washington-based AHAM reported last month that September appliance shipments totaled 7.19 million units, up 5.0% from the 6.85 million units shipped during the same month in 2015. Year-to-date shipments for the first nine months of 2016 were up 1.5% compared to January- September shipments in 2015, AHAM rep orted. Remodeling Expenditures Seen Rising to Peak Levels in 2017 CAMBRIDGE, MA — Recent strong gains in home renovation and repair spending are expected to continue into the second quarter of 2017 before tapering off later in the year, according to the latest "Leading Indicator of Remodeling Activity," released last month by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. The LIRA projects that annual growth in home improvement and repair expenditures will continue to increase, surpassing 8% by the second quarter of next year before moderat- ing as 2017 continues (see related graph, above). "Homeowner remodeling activity contin- ues to be encouraged by rising home values and tightening for-sale inventories in many markets," said Chris Herbert, managing direc- tor of the Cambridge, MA-based Joint Center. However, Herbert said, a recent slowdown in the expansion of single-family homebuilding and existing-home sales "could pull remodeling growth off its peak by the second half of 2017." But even as remodeling growth trends back down, levels of spending are expected to reach new highs by the third quarter of next year," noted Joint Center research analyst Abbe Will. "At (nearly) $327 billion annually, the homeowner improvement and repair market will surpass its previous inflation-adjusted peak from 2006," Will said. Fundamentals Solid as 2016 Draws to a Close Strong gains in spending for home renovation and repair are expected to continue into the second quarter of 2017, surpassing 8% before tapering off later in the year, as reflected in the graph above. However, even as the quarterly growth rate declines, the level of spending, at nearly $327 billion annu- ally, is expected to reach a new high by the third quarter of next year, analysts say (see story below). Source: Joint Center for Housing Studies, Harvard University LEADING INDICATOR OF RESIDENTIAL REMODELING ACTIVITY Homeowner Improvements & Repairs in Billions, With Four-Quarter Moving Rate of Change $277.2 $281.3 $285.0 $285.5 $291.0 $297.2 $303.7 $304.9 $313.0 $322.1 $326.5 2015-Q1 Q2 Q3 Q2 Q3 Q4 (projected) Q4 2016-Q1 Q2 (projected) Q3 (projected) 2017-Q1 (projected) 8.0% 7.0% 5.8% 4.7% 5.0% 5.7% 6.6% 6.8% 7.6% 7.5% 8.3% 10 Kitchen & Bath Design News • December 2016 BAROMETERS A LOOK AT KEY STATISTICS & TRENDS SHAPING THE INDUSTRY MARKET ANALYSIS