BETHLEHEM. PA — Kitchen and bath remodeling demand has softened from early-2022 levels, although demand in the first quarter of 2023 was more robust than expected and the industry “remains on solid footing,” according to the latest Kitchen & Bath Market Index (KBMI), a quarterly gauge of current and future market conditions in the kitchen and bath industry.
The first-quarter 2023 KBMI, the product of a joint venture between the National Kitchen & Bath Association and John Burns Research and Consulting LLC, revealed, among other findings, that kitchen and bath industry health “modestly accelerated” in the first quarter of this year compared to the previous quarter.
The KBMI was based on a survey of some 800+ NKBA members from four industry sectors – design, building and construction, manufacturing, and retail, the NKBA and John Burns said.
First-quarter sales of kitchen and bath products and design services posted a rating of 58.6 on a 100-point scale, down from both the 61.4 reading posted in the previous quarter and the 77 reported at the same time in 2022, according to the Bethlehem, PA-based NKBA, which pointed to continuing cost pressures, lingering inflation, and higher-than-usual mortgage rates.
However, expectations for second-quarter sales reached its highest rating in 12 months, while kitchen and bath professionals are projecting an average 7% year-over-year revenue growth in 2023, the NKBA/John Burns report said.
“Kitchen and bath demand in 2023 is not expected to be widespread. Instead, it will be driven by spending among high-income households in certain geographic markets,” researchers said, noting that high-income households “are generally more resilient in the face of higher prices.”
“Some consumers are pausing large-scale projects until economic conditions stabilize, but others are moving forward with remodeling by shifting toward smaller, lower-cost projects,” researchers added.
Among the KBMI’s other key findings:
- Industry pros said that prime remodeling activity is “in full swing” for smaller renovations, with high borrowing costs and interest making upgrading-in-place more attractive than new construction.
- 60% of surveyed industry professionals reported that profit margins remained flat in the first quarter, an indication that profitability remained stable.
- Fear of recession remains the top concern of kitchen and bath professionals. However, half of those surveyed say they are confident that their business can withstand an economic downturn.