Strength in Housing Fuels Overall
Continued strength in the nation’s housing market meant positive
results for the remodeling and related kitchen/bath markets as the
second half of 2003 got underway. Among the key statistics released
by government agencies, research firms and industry-related trade
associations in recent weeks were the following:
Revving into higher gear for a third consecutive month, home
builders ramped up the pace of housing starts to a
seasonally-adjusted annual rate of 1.87 million units in July, the
National Association of Home Builders reported last month. The
Washington-DC based NAHB attributed the current robust pace in
housing starts to several factors, including favorable interest
rates, signs of an improving economy, a surge in builder
confidence, healthy gains in home values and strong household
formations. July’s gain in housing starts was entirely in the
single-family sector, where a 2% increase was recorded, to a
seasonally-adjusted annual rate of 1.52 million units a 25-year
high for the housing industry (see related graph at right).
Multi-family housing starts continued at a healthy pace in July,
with virtually no change from the previous month at a seasonally
adjusted annual rate of 351,000 units, the NAHB reported.
NEW- AND EXISTING-HOME SALES
Buyer demand for new single-family homes was “quite strong” in
July, with the pace of new-home sales at a seasonally-adjusted
1.165 million units the second-highest sales pace on record. At the
same time, existing-home sales were pegged at a seasonally-adjusted
pace of 5.83 million in June the fourth-highest monthly resale
volume on record according to the National Association of Realtors.
“While June may have been the high-water mark coinciding with the
lowest mortgage rates in more than four decades that month builders
obviously continued to see lots of demand in July,” said Kent
Conine, president of the National Association of Home Builders
CABINET & VANITY SALES
Sales of kitchen cabinets and bathroom vanities increased 15.6% in
July compared to the same month a year earlier, the Kitchen Cabinet
Manufacturers Association said last month. The Reston, VA-based
KCMA noted that manufacturers participating in the association’s
monthly “Trend of Business” survey reported that year-to-date sales
through July were up 10% over sales during the same seven-month
period in 2002.
Domestic shipments of major home appliances rose significantly in
August over the same month in 2002, while year-to-date shipments in
2003 remained well ahead of last year’s record-setting pace through
August, the Association of Home Appliance Manufacturers reported
last month. According to the Washington, DC-based AHAM, domestic
appliance shipments totaled some 5.4 million units in August, up
10.3% over shipments in August 2002. Shipments for the first eight
months of 2003 totaled more than 49 million units, up 8.7% from the
January-August total in 2002, AHAM said.
U.S. sales of decorative laminate are forecast to increase 4.7% per
year through 2007, to a total market of 15.2 billion sq. ft. valued
at $6.1 billion, according to the Cleveland, OH-based Freedonia
Group, Inc., a leading research firm. Gains over the next several
years will be driven largely by “residential repair and improvement
spending, particularly with regard to kitchen and bath remodeling.”
The current market is
K&BDN Index Down, But Still Strong
The kitchen and bath industry is apparatently mirroring the
overall housing market, which remains extremely strong but is
losing a bit of steam as 2003 comes to a close.
The “Kitchen & Bath Industry Performance Index” an exclusive
gauge of business activity developed by Kitchen & Bath Design
News fell to 114.5 this month, off from the highs experienced in
August and September (122.5 and 124.6, respectively), but still
The Index started the year at a benchmark level of 100, and had
declined to a low of 75.1 in April.
Fluctuations in the Index, which is based on dealer surveys and
the latest available economic data, are aimed at providing a
snapshot of the vitality of the kitchen and bath market.
Among the weighted components comprising this month’s Index were
- Surveyed kitchen and bath retailers reported an average of 20
prospects during July, up from 18 a month earlier. Sales were also
up, from a reported average of 10 during June to 15 in July. The
average number of weeks between the time a job was booked and the
work actually began was six weeks for both kitchens and
- The Conference Board’s Consumer Confidence Index, which had
deteriorated the prior month, rebounded in August. The Index stood
at 81.3 (1985=100), up from 77.0 in July. Consumers’ six-month
expectations gained ground from the previous month. Those
anticipating that business conditions will improve over the next
six months rose to 22.5%, while those expecting conditions to
deteriorate fell to 10.7%.
- July kitchen cabinet sales were up 15.6% over July 2002 levels,
according to the latest “Trend of Business” survey released by the
Kitchen Cabinet Manufacturers Association (KCMA). For the first
seven months of 2003, kitchen cabinet sales were 10% ahead of
2002’s pace (see related Barometers, Page 8).
- Domestic shipments of major home appliances rose in July over
the same month in 2002, while year-to-date shipments in 2003
remained well ahead of last year’s record-setting pace through
July, according to the Association of Home Appliance
- Housing starts dipped slightly from 174,600 units in June to
174,000 units in July. The seasonally adjusted annualized start
rate, however, was up 1.5% from June to July, at 1.872 million
units. Building permits also dipped from 172,100 units in June to
162,400 in July. The seasonally adjusted annualized rate in July
was off 2.4% from June to, 1.78 million units, a pace that was 2.2%
of that set in July, 2002.
- New home sales trailed off slightly to 100,000 units during
July. The seasonally adjusted annualized rate for July was 1.17
million units, down 2.9% from June but up 21.2% from July, 2002.
Through the first seven months of 2003, some 658,000 new homes have
been sold, up 13.3% from the same period last year.
- Existing home sales reached 619,000 units during July, up 3.7%
from June. That translates to a seasonally adjusted annualized rate
of 6.12 million units, a record monthly pace, up 5.0% from June and
up 13.8% from July, 2002.
- Stock prices for firms involved in the kitchen/bath industry
were up 3.9% in July and up 5.8% in August. By comparison, the Dow
Jones Industrial Average was up 2.1% in July and 2.9% in