Signs continue to point to a bottoming out for the nation’s housing market and a slow, steady recovery taking hold by the end of what should be another down year in 2009. Among the statistics and forecasts released by government agencies, research firms and industry-related trade associations in recent weeks were the following:

HOUSING STARTS & NEW-HOME SALES

The number of newly built, single-family homes on the market declined for a 23rd consecutive month in March as builders focused on “thinning the supply of unsold homes and positioning themselves for a slow but steady housing recovery,” according to the National Association of Home Builders. The Washington, DC-based NAHB reported last month that the inventory of unsold homes fell to a 10.7-month supply at the current sales pace, amid evidence that the new-home sales market “is bottoming out as historically low mortgage rates [and] attractive home prices spur more interest among consumers,” said NAHB Chief Economist David Crowe. The latest NAHB forecast anticipates that housing starts have already bottomed out. Builder confidence in the market rose five points in April to the highest level since October 2008, the NAHB added. “This is a very encouraging sign that we are at or near the bottom of the current housing depression,” said Crowe.
 
RESIDENTIAL REMODELING

Reductions in the amount spent on high-end home improvement projects continue to hinder overall residential remodeling activity, according to the latest figures from Harvard University’s Joint Center for Housing Studies (see related story, boxed at right). The Joint Center’s latest data points to homeowner improvement spending declining about 12% in 2009, Joint Center officials said. “The weak housing market and the national economic recession continue to take their toll on remodeling,” said Nicolas Retsinas, director of the Joint Center. “It looks increasingly unlikely that this industry will recover until consumers have more confidence in the housing market.” According to Kermit Baker, director of the Remodeling Futures Program of the Joint Center, lower financing costs are beginning to stabilize the downturn in existing home sales, as they also are reducing the cost of financing a home improvement project. “However, they have not been enough to offset rising unemployment and falling consumer confidence,” Baker observed.

EXISTING-HOME SALES

The market for sales of existing homes “seems to be stabilizing,” with modest monthly ups and downs, and signs that first-time buyers are responding to low mortgage interest rates and tax credits, the National Association of Realtors said last month. According to NAR Chief Economist Lawrence Yun, the share of lower-priced home sales has trended up, indicating a return of many first-time buyers. However, sales in the upper price ranges remain stalled because of higher interest rates on jumbo loans, Yun said. Existing-home sales declined 3% to a seasonally adjusted annual rate of 4.57 million units in March, and were 7.1% lower than the 4.92 million-unit pace in March of 2008, the NAR reported. Yun said he expects housing inventories to rise through early summer and gain momentum in the second half of the year, with first-time buyers absorbing a lot of the excess inventory. “Under these conditions, we should see price stabilization in most markets by the end of the year,” Yun said.

CABINET & VANITY SALES

Reflecting declines in the housing market, sales of kitchen cabinets and bathroom vanities fell sharply in March compared to the same month a year earlier, the Kitchen Cabinet Manufacturers Association said last month. According to the Reston, VA-based KCMA, manufacturers participating in the association’s monthly “Trend of Business” survey reported that overall cabinet sales declined 29.2% in March compared to March of 2008. Sales of stock cabinets fell 25.4%, while semi-custom cabinet sales declined 30.4% and custom cabinet sales fell 39.2%, the KCMA said. Year-to-date sales through the first quarter of 2009 were down 32.4% compared to the January-March period of 2008, the KCMA added.

Market Analysis

AIA Survey Sees Demand Declining For Upscale Kitchen & Bath Products

Washington, DC — As the housing market continues to languish, demand is declining for upscale products and features for kitchens and bathrooms, according to the latest American Institute of Architects (AIA) Home Design Trends Survey, conducted in the fourth quarter of 2008.

According to the AIA, which released results of the survey last month, residential architects also reported a greater emphasis on accessibility and Universal Design, and growth in the popularity of renewable materials and products that promote energy efficiency (see related stories, Two New Studies Point to Aging-in-Place Trend).

“Because of concerns over affordability and re-sale value, it’s not surprising that there has been a sharp decline in demand for high-end kitchen and bath products,” said AIA chief economist Kermit Baker, Ph.D., Hon. AIA.

“However, some products and features remain in high demand. Despite the difficult economic conditions, homeowners are extremely interested in renewable flooring and countertop materials, energy-efficient and water-saving products, as well as having a dedicated recycling center.”

Baker added, “A rise in demand for LED lighting options and a drop in interest of multi-head showers are reflective of both greater environmental awareness and desire to keep utility costs manageable. Homeowners are asking architects for ease of access in bathrooms, handheld showers and radiant heated floors.”

“While it’s natural that there is very little demand for move-up and vacation homes given the current state of the economy, this is the first time in the survey’s history that the additions/alterations and kitchen and bath remodeling sectors are reported to be weakening nationally,” Baker added.

The AIA Home Design Trend Survey is conducted quarterly with a panel of 500 architecture firms that concentrate their practice in the residential sector.

Stockwatch

Key Stocks Surge Again in April Rally

An uptick in consumer confidence coupled with better-than-expected corporate earnings pushed most of Wall Street – including stocks connected to the kitchen and bath industry – up again in April, despite a continued contraction in the overall economy.

The index of 52 key stocks of building products manufacturers, distributors, retailers, home builders and e-commerce enterprises – as tracked in Kitchen & Bath Design News’ exclusive monthly Stock Index, gained 192.05 points, or 15.19%, to close the trading period from April 3 to May 5 at 1456.34. In similar fashion, the Dow Jones Industrial Average rose 393.06 points, or 4.90%, ending the month-long trading period at 8410.65, while the Nasdaq Composite Index increased 132.25 points, or 8.15%, to close at 1754.12 (see Market Diary, right). Advancing stocks outpaced decliners by a margin of 50-0 on the KBDN Index. Top gainers for the period included Fortune Brands and Whirlpool Corp. Wolseley PLC, Wickes and Hydromaid were among the biggest losers.