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As 2006 came to a close, there was evidence that the residential remodeling and kitchen/bath sectors were holding their own, even in the face of the continued slide in housing. Among the statistics released by government agencies, research firms and industry-related trade associations in recent weeks were the following:

REMODELING EXPENDITURES
Remodeling activity picked up in the third quarter of 2006, according to the National Association of Home Builders’ latest “Remodeling Market Index,” which revealed modest upticks in both current market conditions and future expectations. Results of the quarterly series of remodeler surveys were released last month. “Though market strength varies across the country, we’re pleased to see a rebound in remodeling activity,” said NAHB Remodelors Council Chairman Vince Butler. “The trillions of dollars in homeowner equity combined with the growing age of the housing stock means that the remodeling market will remain relatively strong in the face of a slower housing market.” The NAHB is currently forecasting $233 billion in home remodeling spending for 2006, up from $215 billion in 2005.

EXISTING-HOME SALES
Following a “correction” in home sales and prices in 2006, existing-home sales are expected to “coast” at roughly the same level this year, although there will be some additional decline in the new-home market, according to the latest forecast released by the National Association of Realtors.
Existing-home sales, expected to fall 8.6%, to 6.47 million in 2006, are projected to be essentially even in 2007, with a 0.6% decline to 6.43 million, the NAR said. New-home sales, likely to drop 16.8% to 1.07 million in 2006, are forecast to fall another 8.7% next year to 975,000, largely due to a significant reduction in construction by builders. Total housing starts this year will probably fall 10.6% to 1.85 million units, and then decline another 11.8% to 1.63 million in 2007.

APPLIANCE SHIPMENTS
Domestic shipments of major home appliances are expected to rise modestly – but, once again, to record levels – in 2007, the Association of Home Appliance Manufacturers forecast last month (see related 2007 Forecast coverage, Page 66, and graph at right). The Washington, DC-based AHAM predicted that total major appliance shipments would hit a record 81.82 million units this year, just over the 81.74 million units that the association estimated were shipped in 2006. The previous record for shipments, set in 2004, was 79.21 million units, AHAM said. The association is projecting modest gains in all major appliance categories, including cooking products (24.6 million units), home laundry equipment (18.02 million units), kitchen clean-up (14.84 million
units) and food preservation (13.79 million units).

CABINET & VANITY SALES
Sales of kitchen cabinets and bath vanities rose 0.8% in October 2006 over sales in October of 2005, 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 sales of stock cabinets rose 1.0% for the month, while semi-custom cabinet sales advanced 1.8% and custom cabinet sales declined 6.2%. Sales for the first 10 months of 2006 were running 8.6% ahead of the same period from January through October of 2005, the KCMA added.

Market Analysis:

Homeowners Confident Over Housing Prospects, New NAHB Survey Reveals

Washington, DC — Americans remain highly confident about the nation’s housing prospects, with more than four out of five homeowners expecting the value of their home to appreciate over the next five years and nearly seven out of 10 calling it their most valuable investment, according to the results from a new nationwide survey.

Results of the survey, conducted by the Washington, DC-based National Association of Home Builders, were announced last month. The survey, involving some 2,000 households, was conducted in late October 2006, the NAHB said.