Signs Evident For ‘Soft Landing’
Housing starts and both new- and existing-home sales, among the key
economic factors affecting the kitchen/bath market, all began their
anticipated minor retreat as the first quarter got underway
pointing toward a solid, but slightly off, year for the
interest-rate-sensitive kitchen and bath industry.
Among the key statistics released by government agencies and
industry-related trade associations in recent weeks were the
Existing-home sales, dampened by recent rises in mortgage rates,
fell in January, declining 10.7% from their “exceptional” December
1999 pace of 5.14 million units to a seasonally adjusted annual
rate of 4.59 million units, the National Association of Realtors
reported. According to the Washington, DC-based NAR, the sales
slowdown resulted primarily from tight inventories, unfavorable
weather conditions and a series of mortgage-rate hikes “that have
caused the market to settle into a less hectic pace.” On a
year-to-year basis, home resales were reported down 10% from
January 1999. Despite the decline, the NAR said that the housing
market “remains robust.”\
Cabinet & Vanity Sales
Sales of kitchen cabinets and bathroom vanities rose once again in
February, increasing 12.3% over sales during the same month in
1999, according to the Kitchen Cabinet Manufacturers Association.
The Reston, VA-based KCMA said that manufacturers participating in
the association’s monthly “Trend of Business” survey reported that
year-to-date sales for the first two months of 2000 show an
increase of 12.5% over January-February of ’99, with stock cabinet
sales up by 12.6% and sales of custom cabinets up by 12.1%.
Domestic shipments of major home appliances continued their
impressive rise in March, gaining 22% over the shipments of March,
1999, the Association of Home Appliance Manufacturers reported.
According to AHAM, year-to-date shipments through March were
running 14.6% over the same three-month period in ’99.
The effects of higher mortgage rates “are starting to be felt in
the single-family housing market,” the National Association of Home
Builders reported last month. The Washington, DC-based NAHB noted
that while multi-family housing starts have risen in recent months,
single-family production is off as are housing permits, an
indicator of future housing-start activity. Single-family housing
starts in 2000 are being forecast to decline 4.6% from last year’s
robust pace, although the full year is expected to represent
nothing worse than a “soft landing” for housing, the NAHB said.
Housing starts dropped 11.2% in March, the largest monthly decline
in six years.