BETHLEHEM, PA — The kitchen and bath industry remains “fundamentally resilient” in the face of current economic headwinds, with spending expected to rise long-term after an anticipated decline in 2024, the National Kitchen & Bath Association is forecasting.
According to the NKBA’s newly released 2024 Kitchen and Bath Market Outlook Report, 2024 revenue for residential kitchen and bath spending is expected to reach $173 billion, a 3% decline from the levels posted in 2023. But while spending this year is forecast to decline, it nevertheless exceeds pre-pandemic levels, “and suggests that the kitchen and bath industry is fundamentally resilient in the face of considerable economic challenges,” said the NKBA, whose forecast was conducted in collaboration with John Burns Research and Consulting.
Remodeling projects deferred in early 2024 will fuel demand in the coming years, the NKBA said, predicting that the number of homes in prime remodeling years will grow by 2.2 million by 2027, to a total of 24 million. In the short-term, however, homeowners are expected to turn to more modest DIY projects and short-term fixes, as they wait for interest rates to become more favorable, the NKBA predicted. High-income households, in contrast, are more likely to move forward with major renovations by tapping into savings, the Bethlehem, PA-based trade association said.
“All signs point to an industry that’s riding out an extremely challenging economic environment and poised to benefit from a more favorable climate as the year progresses,” said Bill Darcy, global president & CEO of NKBA | KBIS. “The long-term view is extremely positive and should inspire real optimism about the potential for significant growth in the years ahead.”
Among the other key conclusions of the NKBA’s 2024 forecast were:
- Spending for kitchen and bath remodeling is projected to reach $67 billion this year, a 2% decline from 2023. “The majority of homeowners with mortgages below 5% view remodeling, rather than moving, as the most cost-effective approach right now,” the NKBA said. However, “while their appetite to remodel is strong, many of those households are deferring large projects or breaking them into smaller phases due to a decline in excess household savings, which have been eroded by inflation over the past 18 months.
- New construction spending, which represents more than 60% of kitchen and bath industry revenues, is forecasted to decline by 4% in 2024, to $106 billion. “While small builders are challenged by high interest rates on land and construction financing, large builders are utilizing rate buydowns to fuel their optimism about single-family starts and sales in 2024,” the NKBA said.
- Once mortgage rates moderate to around 5%, the number of existing homes for sale will return to normal levels, spurring interest from both buyers and sellers to remodel. “Homeowners are still sitting on record levels of home equity that they can tap into once rates stabilize, as projected,” the NKBA said.