Upswing Foreseen in Coming Months
authors Eliot Sefrin | August 13, 2020
The nation’s housing and residential remodeling markets, impacted heavily by the COVID-19 pandemic, are likely to witness a significant rebound in the months ahead – assuming the economy continues its phased reopening and no new major outbreaks of the coronavirus occur, housing analysts say. 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 a sign “that housing stands poised to lead a post-pandemic economic recovery,” builder confidence in the market for newly built single-family homes rose sharply, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index. “As the nation reopens, housing is well-positioned to lead the economy forward,” said NAHB Chairman Dean Mon. “Inventory is tight, mortgage applications are increasing, interest rates are low and confidence is rising,” Mon noted, adding that pent-up demand and low-interest rates “can pave the way for a potential industry bounce-back as we head into the summer months.” According to Robert Dietz, chief economist for the Washington, DC-based NAHB, housing “clearly shows signs of momentum.” Dietz cautioned, however, that elevated unemployment and the risk of new, local COVID-19 outbreaks “remain a risk to the housing market.”
Existing-home sales “will surely rise in the coming months with the U.S. economy reopening,” and could even surpass 2019 figures in the second half of the year,” according to the chief economist for the National Association of Realtors. NAR Chief Economist Lawrence Yun issued that forecast last month after reporting that resales fell nearly 10% in May, marking a three-month sales decline resulting from the coronavirus outbreak. “Although the real estate industry faced some very challenging circumstances, we’re seeing signs of improvement and I’m hopeful that the worst is behind us,” said NAR President Vince Malta. After witnessing several years of urban revival, “the new trend looks to be in the suburbs, as more companies allow greater flexibility to work from home,” Malta added.
Expenditures for improvements to the owner- occupied housing stock are expected to decline in most of the nation’s largest metro areas this year in response to the economic impact of the COVID-19 pandemic, according to projections by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. Even before the pandemic hit, nearly all the 47 tracked metros were expected to see slowdowns in improvement spending through 2020, according to the Cambridge, MA-based Joint Center. COVID-adjusted projections show annual homeowner remodeling spending likely contracting in the majority of metros compared to 2019. “With the pandemic exacerbating localized slowdowns in house prices, existing-home sales and homebuilding, many metros will see even more pronounced erosion of home renovation activity this year,” commented Joint Center economist Abbe Will. “With the country still in the early stages of the COVID-19 pandemic,” Will added, “there is substantial uncertainty about how long the economic downturn will last and how quickly a recovery will take hold.”
Domestic shipments of major home appliances, impacted like other key kitchen/bath products by the COVID-19 pandemic, fell sharply in May, continuing their 2020 pattern of declines, according to the Association of Home Appliance Manufacturers. The Washington, DC-based AHAM reported last month that May appliance shipments totaled 5.62 million units, down 18.9% from the 6.93 million units shipped in May of 2019. Year-to-date shipments through May were down 9.9% compared to the same five-month period in 2019, AHAM said.
COVID-19 Concerns Among Contractors Seen Lessening
INDIANAPOLIS — While professional home improvement contractors “remain concerned” about the impact of COVID-19 on their businesses, their degree of concern “may be lessening,” according to the final in a series of weekly surveys conducted by the Home Improvement Research Institute.
The Indianapolis-based HIRI said that it has seen a “steady decline” in concern among contractors regarding their finances. HIRI and the market research firm The Farnsworth Group partnered until recently to provide a series of weekly updates regarding COVID-19’s impact on the home improvement industry.
Home improvement product purchases, like nearly every aspect of the U.S. economy, posted “a significant downturn” in the tail end of the first quarter, and throughout the second quarter, HIRI said, noting, however, that home improvement “has not been hit as hard (by the COVID-19 pandemic) as other industries, and a strong recovery is expected.”
“While sales have dropped in recent months, demand still remains high, with inventory being a choking point,” HIRI said.
The organization projected that expenditures for home improvement products will total more than $365 billion this year, with roughly one-third in the professional sector (see graph above).
Showroom Protocols Changing Due to Virus, KBDN Poll Finds
EVANSTON, IL — Significant short- and long-term changes in protocol are being implemented at the nation’s kitchen and bath showrooms due to the impact of the COVID-19 pandemic on clients, prospects, subcontractors and business owners.
That’s the key finding of a major new survey conducted by Kitchen & Bath Design News among kitchen and bath design firms across the U.S. The survey, conducted in mid-June, revealed that even while the impact of the coronavirus is receding – and the housing and remodeling markets are rebounding with the reopening of the economy – showrooms are undergoing major changes. Among them are the implementation of a range of virus-mitigation strategies, the use of by-appointment-only visits, entire redesigns, and the increased use of digital tools, including website upgrades, virtual showroom tours and product presentations, and meetings with clients, prospects and subcontractors.
Some of these changes are likely temporary, lasting for only as long as the virus remains a major factor, survey respondents tell KBDN. Other changes, they suggest, may well be permanent – part of a major paradigm shift, or “new reality,” for the kitchen/bath design trade.
According to the survey’s findings, the majority of kitchen and bath showroom owners – more than 69% – report that their showrooms are open full time, while 23% say their showrooms are open by appointment only. About 6% say their showrooms are fully open, although with reduced hours of operation. Only a fraction remain closed entirely due to government virus-mitigation efforts or corporate decisions (see Figure 1).
Design firms report they have also implemented a wide range of virus-mitigation strategies at their showrooms. Among the most common are the imposition of disinfecting protocols for high-touch surfaces, providing hand-sanitizing stations at showroom entrances and exits, and the creation of safe spaces between customers, designers and other team members (see Figure 2).
A significant number of showroom owners report they are currently adding, or are contemplating adding, more virtual and visual tools to their operation. Among the leading actions being taken are the scheduling of additional online meetings/digital consultations with clients and subs, as well as enhanced online communication to present products, designs and proposals (see Figure 3).
While 27.9% say they have not made nor are contemplating significant changes to their showroom operations, 24% say the changes they have made are permanent and 48% say the changes are temporary, for as long as the COVID-19 pandemic lasts. While 44.3% believe the virus-related showroom changes will last six months or less, (55.7%) think they will last longer than six months.
Among the survey’s other key findings:
53.4% of those surveyed require showroom visitors to wear masks and other personal protective equipment (PPE) – for example, gloves. Slightly over 58% of the surveyed showroom owners say they supply the masks and PPE to showroom visitors.
Only 4.8% of survey respondents currently require visitors to sign a health-screening declaration before entering their showroom. Another 12.5% say they are considering such a declaration, which asks visitors to confirm that, in the past 14 days, they have not returned from international travel, have not experienced flu- or cold-like symptoms, and have not had close contact with anyone who has been diagnosed with COVID-19 or experienced cold or flu-like symptoms.
Survey respondents report that 57.7% of showroom visitors and team members are willing to use touchscreens and keypads to view videos or operate working displays. By comparison, 13.4% are unwilling and 28.9% are willing, although concerned.
94% say they currently take steps to regularly sanitize their showroom, in most cases (75%) sanitizing on a daily basis.
A significant number of respondents say they are either currently redesigning (17.6%) or contemplating (12.8%) a redesign of their showroom. Very few (6.8%) say they are contemplating closing their showroom permanently, while 11.8% report they are contemplating downsizing.
— ELIOT SEFRIN