Market headwinds – including higher interest rates, supply chain disruptions and inflationary pressures – continue to have an impact on the nation’s construction trades, even as demand for kitchen/bath and other remodeling projects remains high. Among the key statistics and forecasts released in recent weeks by government agencies, research firms and industry-related trade associations were the following:
HOUSING STARTS & NEW-HOME SALES
In the latest sign that the housing market slowdown continues, builder confidence in the market for newly built single-family homes was reported at its lowest level since May 2014 (except for the spring of 2020), the National Association of Home Builders reported. Builder sentiment has been declining throughout 2022, as the combination of elevated interest rates, supply chain disruptions and high home prices continue to take a toll on housing affordability, which is currently at more than a 10-year low. “The housing recession shows no signs of abating, as builders continue to grapple with elevated construction costs and an aggressive monetary policy from the Federal Reserve that helped pushed mortgage rates above 6%, the highest level since 2008,” said NAHB Chief Economist Robert Dietz. Year-to-date, single- family housing starts are down 4%, while the multifamily sector is up some 28%, the NAHB reported, adding that new-home sales expected to move on a downward trend in the months ahead, as the Fed continues to raise interest rates to rein in high inflation.
Available existing homes for sale “will remain tight” in the months ahead, and even for the next several years, the chief economist for the National Association of Realtors said last month. According to Lawrence Yun of the Washington, DC-based NAR, the current softness in resales reflects this year’s escalating mortgage rates and the fact that “some homeowners are unwilling to trade up or trade down after locking in historically low mortgage rates in recent years, increasing the need for more new-home construction to boost supply.” Existing-home sales have fallen this year compared to 2021 across the four major U.S. regions, the NAR reported. “The housing sector is the most sensitive to, and experiences the most immediate impacts from, the Federal Reserve’s interest rate policy changes,” Yun observed.
CABINET & VANITY SALES
Sales of kitchen cabinets and bathroom vanities continued their year-long upward trajectory in August, the Kitchen Cabinet Manufacturers Association reported (see related graph above). According to the KCMA’s latest monthly Trend of Business Survey, participating manufacturers reported an increase of 24.8% in overall cabinet and vanity sales in August compared to August of 2021. Custom cabinet/vanity sales rose 15.9% over the same month the previous year, while sales of semi-custom units gained 32.9% and stock cabinet sales were up 21.6%, the Reston, VA-based KCMA said. Year-to-date sales remain strong through the first eight months of 2022, up 16.8% compared to January-August of 2021, according to the KCMA, which reported year-to-date gains in custom (17.0%), semi-custom (13.9%) and stock units (18.8%).