Housing Recovery Gradually Taking Hold

A steady recovery is gradually taking hold across most sectors of the residential construction industry, including the kitchen/bath market, the latest economic figures reveal. Among the key statistics and forecasts released by government agencies, research firms and industry-related trade associations in recent weeks were the following:

HOUSING STARTS

Despite continued gains in nationwide housing starts, the anticipated housing recovery continues to face “considerable headwinds,” including a shortage of credit for housing production “that is stifling new development in reviving markets,” the National Association of Home Builders said last month. The Washington, DC-based NAHB was, nevertheless, encouraged by the latest round of economic data, which points to growing home builder confidence and a gradual recovery. The latest indicators “signify that home builders are confident enough to begin work on homes that will be completed after the expiration of the home buyer tax credits,” noted NAHB Chief Economist David Crowe. “The solid gain in permit issuance is particularly welcome news, since those numbers are generally a reliable indicator of future building activity,” Crowe said.

PLUMBING PRODUCTS

Global demand for plumbing fixtures and fittings is forecast to increase 3.5% annually through 2013, to a total market of $66 billion, according to a new study from The Freedonia Group, a Cleveland, OH-based industry research firm. While decelerating from the 2003-2008 pace, advances will still be “quite healthy,” as worldwide building construction spending and economic activity rebound from several years of slow growth. In the U.S., building construction expenditure growth will accelerate through 2013 “because the country experienced the effects of the financial crisis at a much earlier date” than other nations, The Freedonia Group said, adding that nearly all spending gains for plumbing products will be concentrated in the residential sector.

APPLIANCE SHIPMENTS

Domestic shipments of major home appliances posted their first increase in months in April, according to the Association of Home Appliance Manufacturers. The Washington, DC-based AHAM reported last month that appliance shipments were up 12.1% in April, and 1.6% through the first four months of 2010, compared to the same periods in 2009.

Appliance shipments in a number of key categories such as cooking equipment, kitchen cleanup and food preservation all exhibited increases, AHAM reported. Cooking equipment posted gains of 13%, kitchen cleanup posted an increase of 8.3%, and food preservation posted a significant gain of 33.6% in April.

CABINET & VANITY SALES

Sales of kitchen cabinets and bathroom vanities posted their first increase in months during March, rising modestly compared to the same month a year earlier, the Kitchen Cabinet Manufacturers Association said last month. According to the Reston, VA-based KCMA, manufacturers participating in the association’s monthly “Trend of Business” survey reported that overall cabinet sales gained 0.8% in March, compared to March of 2009. Sales of stock cabinets increased 1.7%, while semi-custom sales rose 3.7% and custom cabinet sales declined 16.8%, the KCMA reported. Year-to-date sales through the first three months of 2010 were down 2.5% compared to the January-March period of 2009, the KCMA added.

Market Analysis

‘Healthy Rebound’ for Home Remodeling Expected in 2010, as Economy Improves

Cambridge, MA — Home improvement spending will recover this year, aided by a gradual recovery in the broader U.S. economy, according to the latest in a quarterly series of reports issued by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University.

According to the Joint Center’s “Leading Indicator of Remodeling Activity (LIRA),” released last month, annual spending on residential remodeling will accelerate through this year, with nearly 5% growth projected for the full year.

“The gradual recovery in the broader economy should encourage more remodeling spending by homeowners,” said Nicolas Retsinas, director of the Joint Center for Housing Studies. “This year could produce the first annual spending increase for the industry since 2006.”

According to Kermit Baker, director of the Remodeling Futures Program at the Joint Center for Housing Studies, “favorable market conditions” support the projected increase in remodeling activity.

“With house prices showing modest gains in most markets and the employment outlook beginning to stabilize, owners are likely to refocus attention on home improvements,” Baker said. “Home sales are trending up, which shows growing confidence in the housing market.”

The quarterly LIRA findings are designed to estimate national homeowner spending on improvements for the current quarter and subsequent three quarters. The indicator provides a short-term outlook of homeowner remodeling activity and is aimed at identifying future turning points in the business cycle of the home improvement industry.