Kitchen & Bath Design News

JUN 2018

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SOLID FUNDAMENTALS AR pointing to gains for both new construction and residential remodeling, although market constraints continue to hinder more robust growth. Among the key statistics and forecasts released in recent weeks by government agen- cies, research firms and industry-related trade associations were the following: RESIDENTIAL REMODELI Consumers "remain engaged" in home-im- provement efforts, although higher prices for labor and materials continue to cause delays in project starts, as well as higher costs. Joanne Theunissen, Remodelers chair for the National Association of Home Builders, said last month that strong price appreciation, inventory short ages and homeowners' desire for updated ame- nities are among the factors keeping residential remodeling on "solid footing." The NAHB's latest Remodeling Market Index posted a read ing of 57 in the first quarter of 2018, down three points from the previous quarter and back to the same level as the third quarter of 2017 (see graph at right). The RMI, which measures cur rent and expected remodeling activity, has been above 50 – indicating that more remodelers report market activity is higher compared to the prior quarter than report it is lower – since the second quarter of 2013. HOUSING START Ongoing job creation coupled with wage increases and rising household formations are expected to result in continued, gradual strengthening of the housing market in the coming months, according to the chief econ- omist for the National Association of Home Builders. NAHB Chief Economist Robert Dietz said last month that housing starts – currently pegged at a seasonally adjusted annual rate of about 1.32 million units – are "still in line with solid builder confidence readings," with sluggishness in single-family starts "largely attributable to lingering winter weather that is causing production delays in certain areas." "Builders are optimistic about future demand and are ramping up production to meet this demand," noted Randy Noel, chairman of the Washington, DC-based NAHB. EXISTING-HOME SALE While a healthy economy is generating sustained purchasing interest, existing-home sales are lagging year-ago levels "because supply is woefully low and home prices keep climbing above what some would-be buy- ers can afford," according to the National Association of Realtors. "Although the strong job market and recent tax cuts are boosting the incomes of many households, speedy price growth is squeezing overall affordability in several markets – especially those out West," said Lawrence Yun, chief economist for the Washington, DC-based NAR. Existing-home sales – pegged at a seasonally adjusted annual rate of 5.60 million units – have been growing, but inventory levels and affordability con- straints have kept sales activity slightly below year-ago levels, the NAR reported APPLIANCE SHIPMENT Domestic shipments of major home appliances advanced again in March, although first-quar ter 2018 shipments remained slightly below those of the first three months of 2017, accord- ing to the Association of Home Appliance Manufacturers. The Washington, DC-based AHAM reported last month that March ap pliance shipments totaled 8.31 million units, up 3.9% from the 7.99 million units shipped during the same month last year. Despite the March advance, however, year-to-date sale through March remained 0.6% lower than sales during the same three-month time period last year, AHAM said Home Buyers Seen as Skittish, Despite Confidence in Economy WASHINGTON, DC — New findings from the National Association of Realtors reveal that while a growing number of households feel more confident about the economy and their finances, those feelings aren't translating to feelings that now is a good time to buy a home. That's according to a recent survey, which found that optimism that "now is a good time to buy a home" is at its lowest level in the past two years, according to the Washington, DC based NAR. "The shortage of listings in most markets continues to spark a hike in home prices that's not easy for many buyers to overcome," said NAR Chief Economist Lawrence Yun. Another mitigating factor, Yun said, is the fact that mortgage rates have risen to a four year high. Yun noted that a majority of homeowners have amassed equity gains since the housing downturn, with home prices having risen a cu- mulative 48% since 2011. He added that home- owners are increasingly p ositive about selling. "Supply conditions would improve measur- ably, and ultimately lead to more sales, if a grow ing number of homeowners finally decide that this is the time to list their home for sale," Yun said. Housing, Remodeling Bucking Constraint Price appreciation, inventory shortages and homeowners' desire for updated amenities are amon the factors keeping residential remodeling on solid footing, although higher prices for labor an materials continue to cause delays in project starts, as well as higher overall project costs. As seen above, the National Association of Home Builders' latest Remodeling Market Index posted reading of 57 in the first quarter of 2018, down three points from the previous quarter (see story below). Despite the decline, the RMI, which measures current and expected remodeling activity has been above 50 since the second quarter of 2013. Measurements above 50 indicate that more remodelers report market activity is higher compared to the prior quarter than report it is low Source: National Association of Home Buil REMODELING CONDITIONS SOFTE BUT STILL REMAIN POSITI Seasonally Adjusted National Remodeling Market Index Q1 2015 Q1 2016 Q1 2017 Q1 2018 Q2 Q2 Q2 Q3 Q3 Q3 Q4 Q4 Q4 57 57 57 57 57 60 58 58 55 54 53 53 59 10 Kitchen & Bath Design News • June 2018 BAROMETERS A LOOK AT KEY STATISTICS & TRENDS SHAPING THE IND MARKET ANALYS

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