Demand Seen Fueling Market Growth
Strong demand stemming from low interest rates, favorable demographics and a suburban shift for home building to smaller, more affordable housing markets are expected to be among the key factors fueling housing and remodeling growth in 2021 – although rising lumber and material costs threaten to blunt the momentum, market analysts say. Among the key statistics and forecasts released in recent weeks by government agencies, research firms and industry-related trade associations were the following:
The residential remodeling market declined significantly at the onset of the COVID-19 pandemic, “but has since more than fully recovered,” according to the Washington, DC-based National Association of Home Builders, which predicted that spending on residential improvements for owner-occupied single-family homes will continue to grow at a “healthy pace” over the next two years, increasing 4% in 2021 and another 2% in 2022. The NAHB pointed to steady consumer demand and high levels of remodeler confidence as among the keys to anticipated growth. The biggest factors prohibiting stronger growth are mainly volatile material prices and labor shortages, the association added.
Whereas much of the U.S. economy has suffered due to the impact of COVID-19, the housing sector “has been one of the few bright spots,” the chief economist for the National Association of Realtors said last month. According to the NAR’s Lawrence Yun, existing-home sales are “continuing to play a part in propping up the economy (and), with additional stimulus and several vaccines now available, the housing outlook looks solid for this year.” Yun said he expects more jobs to return, which will spur homebuying in the coming months, and predicted that existing-home sales will reach at least 6.5 million units in 2021, even as mortgage rates are likely to inch higher due to a rising budget deficit and higher inflation.
CABINET & VANITY SALES
Major domestic kitchen cabinet manufacturers posted early-year sales gains in 2021, according to the latest in the monthly series of Trend of Business Surveys conducted by the Kitchen Cabinet Manufacturers Association’s. The KCMA’s latest survey results, released last month, reflected a 10.4% rise in overall sales among participating cabinet manufacturers for January, compared to the same month in 2020. Custom sales were up 7.8% over those of January 2020, while semi-custom sales rose 17.7%, and stock sales increased 6.1%, according to the Reston, VA-based trade association.
A surge in fourth-quarter activity helped spark a modest full-year gain for domestic shipments of major home appliances in 2020, the Association of Home Appliance Manufacturers reported last month. According to the Washington, DC-based AHAM, a fourth-quarter 2020 increase of 16.3% was largely responsible for a full-year gain of 3.8% in appliance shipments over the same 12-month period in 2019. Appliance shipments through mid-year had been lagging those of the previous year, but improvements were posted as the impact of the COVID-19 pandemic became less pronounced, AHAM noted. Last year’s gains were posted in all key product categories, including cooking appliances (+7.6%), kitchen cleanup (+10.3%), food preservation (+15.0%) and home laundry (+12.1%), the trade association added.