The prolonged, steep downturn in housing continues to impact shipments of key kitchen and bath products – including cabinets and appliances – although forecasts are now calling for an improvement in housing conditions by the second quarter of next year. Among the statistics and forecasts released by government agencies, research firms and industry-related trade associations in recent weeks were the following:
Housing Starts & Sales
The latest surveys of home builders are revealing a substantial improvement in sales expectations for the next six months, according to David Seiders, chief economist for the National Association of Home Builders. Noting that builders have been “pulling in the reins on new production,” Seiders projected a “stabilization” of new-home sales in the final quarter of 2008, and a steady recovery in housing by the second quarter of 2009. According to the latest available figures, housing starts continued to decline nationwide, as home builders continued to cut back on new construction in order to scale back inventories and help pave the way for market recovery, the Washington, DC-based NAHB said. In the meantime, builder confidence in the market for newly built single-family homes rose in September for the first time in seven months, the trade association added.
The level of existing-home sales is expected to show little movement in the months ahead, according to the latest forecast by the National Association of Realtors, which reported last month that pending home sales are “oscillating month-to-month, with the long-term trend essentially flat.” Even with the latest pullback, pending home sales have been fairly stable on a national basis for nearly a year, “with dramatic local market differences continuing,” according to the Washington, DC-based NAR, which noted that there are “many ambiguities” in the housing market. “The outlook,” said NAR chief economist Lawrence Yun, “is very cloudy.”
Cabinet & Vanity Sales
Sales of kitchen cabinets and bathroom vanities, impacted by the prolonged housing slump, tumbled again in August 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 declined 26.2% in August compared to August of 2007. Sales of stock cabinets fell 21.5% while semi-custom cabinet sales dropped 29.6% and custom cabinet sales fell 31.2%, the KCMA reported. Year-to-date sales through the first eight months of 2008 were down 17.2% compared to the January-August period of 2007, the KCMA added.
Factory shipments of major home appliances declined sharply in September, slipping 14.7%, to 5.8 million units, down from 6.8 million units shipped the same month a year ago, according to the latest figures from the Association of Home Appliance Manufacturers. The Washington, DC-based AHAM reported that year-to-date shipments through September, at 53.9 million units, were off 8.2% from the same nine-month period in 2007, when 58.8 million units were shipped. Declines were posted in nearly all product categories, including cooking, kitchen clean-up and food preservation, AHAM said.
Business Conditions Seen Slipping in Latest AIA Quarterly Survey
Washington, DC — Billings at architecture firms and inquiries for new projects are both at “extremely low levels,” with no signs of an imminent turnaround, according to the latest in a series of surveys conducted quarterly by the American Institute of Architects.
The Washington, DC-based AIA reported last month that the extended slowdown in the residential market “is adversely affecting architecture firms.”
The finding was based on information culled from the AIA’s second-quarter 2008 “Home Design Trends Survey,” conducted quarterly among a panel of 500 architecture firms whose practices are focused in the residential sector.
According to the AIA, the national billings index for the second quarter was 38 for the second quarter, the lowest score in the three and one-half year history of the survey. Inquiries for new projects also dropped to a historic low mark of 37.
Any score below 50 indicates a decline in activity, the AIA noted.
In terms of specific construction segments, kitchen and bath remodeling ranked second in terms of positive activity, although activity among architects was reported to be at a level well below that of a year ago (see graphic on the right).
Key Stocks Plunge In Wall Street Crisis
Stocks connected to the kitchen and bath industry plunged along with the rest of Wall Street in September – a tumultuous month that saw the financial services sector collapse under the weight of toxic mortgages and consumer uncertainty.
The index of 52 key stocks of building products manufacturers, distributors, retailers, home builders and e-commerce enterprises – as tracked in Kitchen & Bath Design News’ exclusive monthly Stock Index – plummeted 464.08 points, or 20.9%, to close the trading period from Sept. 5 through Oct. 8 at 1756.11. In similar fashion, the Dow Jones Industrial Average plunged 1,962.86 points, or 17.49%, ending the month-long trading period at 9258.10, while the Nasdaq Composite Index slid 515.55 points, or 22.85%, to close at 1740.33 (see Market Diary, below). Declining stocks outpaced advancers by a margin of nearly 25-1 on the KBDN Index.
Top gainers for the period included Standard Pacific, Wickes and Weyco. Leading losers included Whirlpool Corp., Sears and Mohawk Industries.