Market Riding High, Despite Softening

The housing, remodeling and related kitchen/bath markets are still performing at historically high levels, although conditions appeared to be softening modestly ' and per previous forecasts ' as 2005 opened. Among the key statistics released by government agencies, research firms and industry-related trade associations in recent weeks were the following:

HOUSING STARTS
Home builders continue to sound an overall positive note regarding the ongoing strength of the market for newly built single-family homes, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Though unusually wet weather conditions across much of the country helped push the HMI down two points in February, builder expectations for the next six months held steady from the beginning of the year, the Washington, DC-based NAHB said. The optimism is supported by the fact that housing starts jumped 4.7% in January to a seasonally-adjusted annual rate of 2.159 million units, the highest pace in 21 years, according to the NAHB. January's housing starts also were 11.6% above the pace of a year ago.

EXISTING-HOME SALES
Existing-home sales were essentially flat in January, but remained at historically high levels, the National Association of Realtors reported. According to the Washington, DC-based NAR, total existing-home sales ' including single-family homes, townhomes, condominiums and co-ops ' reached a seasonally-adjusted annual rate of 6.8 million units, down slightly from a level of 6.81 million in December of 2004. David Lereah, NAR's chief economist, said January home sales were buoyed by the condo sector, which offset a slight decline in single-family home sales.

RESIDENTIAL REMODELING
Remodeling activity slowed slightly in the fourth quarter of 2004, as the year ended with unusually wet weather, according the National Association of Home Builders. Citing its latest in a series of Remodeling Market Indexes (RMI), the NAHB's Remodelors Council said, however, that "remodelers are looking forward to a rebound in the spring." The RMI is derived from a quarterly national survey of 500 remodelers and is seasonally adjusted. "Despite the slowdown in the fourth quarter of 2004, the market remains positive as future expectations continues to record growth," said NAHB Chief Economist David Seiders. "Calls for bids and appointments for proposals are still coming in, leading us to expect a healthy 2005."

APPLIANCE SHIPMENTS
Domestic shipments of major home appliances declined in January from the same month last year, reflecting a slight softening of the market from record 2004 levels, the Association of Home Appliance Manufacturers reported. Much of the decline, however, was attributed to a sharp drop in home comfort products (air conditioners and dehumidifiers), according to the Washington, DC-based AHAM. The trade association reported that 5.025 million appliances were shipped in January, down from the 5.270 million units shipped in January of 2004. Declines were posted in food preservation products (14.1%), cooking products (-10.4%) and home laundry (8.6%). In contrast, kitchen cleanup products posted a 1.3% gain. Despite the January decline, AHAM said it is holding to its 2005 shipment forecast of 78.7 million appliances, up from the record 77.9 million appliances shipped in 2004.

CABINET & VANITY SALES
Sales of kitchen cabinets and bathroom vanities rose 12.8% in January over sales 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 sales of stock cabinets were up 18% for the month, while custom cabinet sales gained 1.1%.

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