Mid- & High-End Projects to Fuel 2021 Growth, NKBA Predicts
HACKETTSTOWN, NJ — Unlike the do-it-yourself trend of 2020, kitchen and bath remodeling in 2021 will be driven by mid- and high-end projects, according to a newly issued forecast by the National Kitchen & Bath Association.
The NKBA’s annual Market Outlook report, released last month by the Hackettstown, NJ-based trade association, projects annual kitchen and bath revenues will see “continued growth,” rising to $158.6 billion in 2021, a 16.6% increase over an estimated $136 billion in 2020. The market, which had gained 9% in 2018 and 1% in 2019, declined 5.9% in 2020, the NKBA said.
The NKBA pointed to “multiple encouraging indicators as a cause for optimism.” Among them are near-record-low mortgage rates and growth in single-family residential construction, as well as significant home-price appreciation, which has historically been a precursor for jump-starting high-end home renovations. The association also cited a lowering of risks associated with COVID-19 and a pent-up demand fueled, in part, by a shortage of available housing and “cautionary savings” accumulated during the pandemic.
“After such a strong year for home remodeling in 2020, some wondered if we were approaching a home improvement spending ‘cliff’ (but) that’s not what the kitchen and bath market is expecting in 2021,” said NKBA CEO Bill Darcy. “Last year, homeowners started the work of improving their living spaces with DIY projects. And this year, with early distribution of the vaccine and other measures to reduce the public health impact of the virus, we expect to see continued renovations and more projects requiring our members.”
“Homeowners cite the kitchen and bath areas as two times more important than other spaces within the home, and the kitchen particularly gained status throughout the COVID-19 pandemic,” Darcy added. “With a renewed focus on these rooms, the industry projects a tailwind of big interior projects, kitchen remodels.”
According to the NKBA, while larger, more professional-intensive projects are slated to increase this year, homeowners cited a desire to save money (25%), additional time to pursue projects (23%) and health and safety concerns (22%) as the primary reasons for recent DIY work. Homeowners completing budget-friendly bathroom remodels focused on updating cabinets (52% of projects) and plumbing (43% of projects). Smart home products (57%) and water filtration systems (54%) were the focus of premium feature upgrades in the kitchen, the NKBA added.
Among the outlook’s other key conclusions:
• New construction is being forecast to grow by more than 22%, compared to 10% for kitchen and bath remodeling. By specific room, $82 billion, or 52%, is expected to go toward the bathroom and $76 billion, or 48%, toward the kitchen. Spending on new construction represents 57% of the total residential kitchen and bath spending at $90.0 billion. Residential remodeling makes up 43% at $68.6 billion in spending.
• High-end (19.8% forecasted growth) and mid-range projects (+18.5%) are expected to lead the kitchen/bath market rebound. Low-end projects, by comparison, are being forecast to post 9.7% growth. Each of the three market sectors should achieve their highest revenue levels in at least five years, according to the NKBA.
• Both household income and life stage jointly influence kitchen remodel cost considerations. “Mature households,” those age 45+ with no children, have the highest share of premium upgrades in their kitchens.
The NKBA commissioned the John Burns Real Estate Consulting firm to conduct the market analysis, which is based on government and industry sources, internal forecasting models, and more than 4,700 online surveys of homeowners who initiated a home improvement project since the start of the COVID-19 pandemic, NKBA officials said.