Housing Market Continues Surge

The housing and kitchen/bath markets, bolstered by continued strong fundamentals and an improved economy, continued to show robust growth into the second quarter of 2005, with forecasts generally positive for the rest of 2005. The most recent key statistics released by government agencies, research firms and industry-related trade associations included:

NEW- & EXISTING- HOME SALES

Both new- and existing- home sales continue to surge-bolstered by favorable market fundamentals, including mortgage rates that remain low and stable, growing employment and increases in household income. Sales of newly built, single-family homes posted a record pace for the second month in a row in April, nudging up to a seasonally adjusted annual rate of 1.316 million units, noted NAHB. At this pace NAHB expects new-home sales this year to challenge 2004's record sales. Existing-home sales also hit a record high in April, defying expectations of a modest slowing trend, noted Washington, DC-based NAR. Single-family home sales rose 4.5% for the month, to a record seasonally adjusted annual rate of 6.28 million - up from a level of 6.01 million in March. April’s sales activity was 5% above the 5.98 million-unit pace in April 2004, NAR said. And total existing-home sales rose 4.5% in April, to a seasonally adjusted annual rate of 7.18 million.

REMODELING EXPENDITURES

Remodeling activity showed "strong growth" in 2005's first quarter, according to the latest NAHB Remodeling Market Index (RMI). The first-quarter results were two points ahead of 2004's seasonally adjusted fourth quarter, NAHB said. The seasonally adjusted RMI is derived from a quarterly national survey of more than 500 remodelers. The latest index of current conditions rose from 50.7 in the fourth quarter of 2004 to 52.9 in the first quarter of 2005. The future expectations index moved slightly lower, from 54 to 53.6, but stayed positive, noted the Council.

APPLIANCE SHIPMENTS

Domestic shipments of major home appliances are expected to post a decline in 2005 from 2004's record high, according to a revised forecast released by AHAM. The latest forecast, released in late-May, calls for some 77.6 million major appliances to be shipped this year, down from the record 79.2 million appliances shipped domestically in 2004. Previous forecasts issued by Washington, DC-based AHAM had projected that '05 appliance shipments would break the annual U.S. shipment record for the fourth year in a row (see graph, above). But year-to-date shipments have been lagging behind 2004 numbers since the start of 2005. Even with the decline, '05 shipments are expected to represent the second-highest annual total ever, AHAM noted.

CABINET & VANITY SALES

Sales of kitchen cabinets and bath vanities rose 13.6% in April over sales the same month a year earlier, the KCMA said last month. The Reston, VA-based KCMA said manufacturers participating in its monthly “Trend of Business” survey reported sales of stock cabinets were up 13.7% for the month, while semi-custom cabinet sales increased 15.5% and custom cabinet sales gained 3.6%. Year-to-date cabinet sales for the first four months of 2005 were up 14.1% over the same period in 2005, KCMA added.

Market Analysis

Housing Market, Though Receding from Peak Levels, Still Seen as Healthy: Analysts

Washington, DC-Despite softening in U.S. economic growth, hikes in interest rates and rapid price gains in the nation's hottest housing markets, housing should remain healthy through next year even as it recedes from peak levels.

That was the consensus of economists who spoke in May at a forecasting conference sponsored by the National Association of Home Builders (NAHB) here.

Driven by on-going population growth and household formations, an expanding market for second homes and the need to replace aging units, demand for housing should hold up well in the foreseeable future, panelists said. In addition, further growth in the nation's job force and rising incomes should help offset the negative impact of higher mortgage rates, which are still expected to be at affordable levels by historic standards, the housing analysts agreed.