Kitchen & Bath Design News

JAN 2018

Kitchen & Bath Design News is the industry's leading business, design and product resource for the kitchen and bath trade.

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ROBUST ECONOMIC AND job growth should continue to fuel the housing market, as reflected in year-end 2017 barometers that point to steady gains in 2018. Among the key statistics and forecasts released in recent weeks by government agencies, research firms and industry-related trade associations were the following: HOUSING STARTS & SALES The recent uptick in nationwide housing produc- tion is consistent with forecasts for "solid, steady growth," according to the National Association of Home Builders. "As the job market and overall economy continue to firm, we should see demand for housing increase as we head into 2018," said Robert Dietz, chief economist for the Washington-based NAHB. The government reported that nationwide housing starts rose to a seasonally adjusted annual rate of 1.29 million, the highest reading in a year. Sales of newly built, sin- gle-family homes also rose to a seasonally adjusted annual rate of 685,000 units, the highest sales pace since October 2007. "This uptick is aligned with reports of strong builder confidence," said NAHB Chairman Granger MacDonald. "Our members are optimistic about the future, even as uncertain- ties remain" (see related Forecast 2018, Page 68). EXISTING-HOME SALES Robust job growth in most of the country "is starting to slowly push up wages, which is, in turn, giving households added assurance that now is a good time to buy a home," says Lawrence Yun, chief economist for the National Association of Realtors. Nevertheless, sales of existing homes remained below prior-year levels through October 2017 "because low inventory is limiting choices for prosp ective buyers and keeping price growth elevated," Yun said. The Washington-based NAR added that the median existing-home price for all housing types was up in October for the 68th consecutive month. On the flip side, total housing inventory has fallen year-over-year for 29 consecutive months, the realtors' association rep orted. CABINET & VANITY SALES Sales of kitchen cabinets and vanities gained steady ground in October 2017 compared to sales recorded for the same month the pri- or year, the Kitchen Cabinet Manufacturers Association said last month. According to the Reston, VA-based KCMA, manufacturers participating in the association's "Trend of Business" survey reported that October 2017 sales of cabinets and vanities rose 3.7% over those of October 2016. Sales of stock cabinets gained 5.8%, while semi-custom cabinet sales rose 1% and custom cabinet sales increased 5.4%, the KCMA said. Year-to-date cabinet sales through October 2017 were up 2.9% compared to the same 10-month period in 2016, the trade association added. APPLIANCE SHIPMENTS Domestic shipments of major home appliances retreated slightly in October 2017, while still pacing ahead of 2016 totals through the first 10 months of the year, according to the Association of Home Appliance Manufacturers. The Washington-based AHAM reported last month that October 2017 ap- pliance shipments totaled 5.7 million units, down 0.5% from the 5.73 million units shipped during the same month in 2016. Shipment declines were most notable in home comfort products such as air conditioners (-41.3%) and home laundry prod- ucts (-5.3%), while gains were posted for cooking products (+0.6%) and kitchen clean-up products (+1.8%). Year-to-date sales through October were 5.8% higher than during the same 10-month time frame in 2016, the trade association added. Housing Supply Shortages Seen Slowing First-Time Buyers CHICAGO — Stubbornly low inventory conditions are behind the below-average share of first-time home buyers, although there's evidence that an increase in homebuilding is around the corner. That's the view of Jessica Lautz, manag- ing director of survey research at the National Association of Realtors, and Robert Dietz, chief economist for the National Association of Home Builders, both of whom shared their insights on housing at a recent conference here. Lautz noted that supply constraints at the lower end of the market are a big part of why first- time buyers are lagging the historical average of 39%. With low inventory pushing prices upward, buyers have needed higher incomes. "The supply of homes continues to be way under a balanced market of six months, home prices have risen for months and multiple offers on listings are a common occurrence," said Lautz. "Without enough listings on the market, affordability is decreasing and buyers are increas- ingly [struggling to find] the right home." Dietz said that building lags for several reasons, including a shortage of labor, low lot availability, rising material costs and the difficul- ties builders are having in obtaining loans. Despite this, Dietz pointed to a recent surge in builder confidence and the pace of single-fam- ily housing starts, and predicted that housing demand will only increase in the coming years. Market Growth Foreseen for 2018 Confidence about market conditions was high and holding steady through the third quarter of 2017 among home-renovation professionals, including architects, designers, general remodelers, design-build and specialty firms such as kitchen and bath dealerships. As illustrated by the 'Houzz Renovation Barometer' above, specialty renovation firms – similar to other industry sectors – maintained confidence scores well above 50 for the past two years. Scores exceeding 50 indicate that there are more firms reporting that business activity is higher than firms reporting it is lower in a given quarter compared to the prior quarter. Houzz's quarterly index also revealed that remod- elers' project backlogs have grown and labor shortages continue to be widespread. Source: Q3 2017 Houzz Renovation Barometer THE CONFIDENT MINDSET OF BUILDING & RENOVATION SPECIALISTS Quarter-Over-Quarter Confidence Levels Q1 2016 Q1 2017 Q2 Q2 Q3 Q3 Q4 64 69 73 72 72 73 72 12 Kitchen & Bath Design News • January 2018 BAROMETERS A LOOK AT KEY STATISTICS & TRENDS SHAPING THE INDUSTRY MARKET ANALYSIS

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