Early Indicators Point To Another Solid Year

Indicators continue to point to another solid year for housing and the kitchen/bath market in 2005, even as results from a highly positive 2004 continue to be compiled. Among the key statistics released by government agencies, research firms and industry-related trade associations in recent weeks were the following:

EXISTING-HOME SALES
Stronger-than-expected home sales and higher median prices have caused the National Association of Realtors to upwardly revise its year-end forecast for 2004, with existing-home sales expected to jump 7.9%, to 6.58 million units, well above the record set in 2003. For 2005, The Washington, DC-based NAR projects 6.38 million sales, which would be the second highest level on record (see related graph, above right). "We're setting our fourth consecutive record year for existing-home sales, and even with strong fundamentals such as household growth, low interest rates and an improving economy, we simply can't set records every year," said David Lereah, the NAR's chief economist. "Given the sharp rise over last year's record, a lot of buyers have found the home they've been looking for and we can expect a bit of a breather in 2005, which will remain a historically strong year, Lereah said. Lereah said he expects economic conditions in 2005 will be comparable with those of last year. "Our forecast is for a continuation of strong home sales, although down a little from the record-setting pace of 2004," he said.

RESIDENTIAL REMODELING
Last year proved to be "a banner year" for residential remodeling, due largely to historically low interest rates and a solid level of consumer confidence, the National Association of Home Builders reported. According to the Washington, DC-based NAHB, its latest in a series of Remodeling Market Indexes (RMI) posted a strong third quarter. "With home sales remaining record-breaking, the major additions and alterations sector has kept many remodelers busy with continually growing backlogs," said NAHB Remodelors Council chairman Douglas Sutton, Sr. The RMI is derived from a quarterly national survey of 500 remodelers. "With the ongoing favorable interest rates, rising employment and household incomes, and high home price appreciation rates, we expect the remodeling market to remain on a strong growth path," said NAHB Chief Economist David Seiders. "The outlook for 2005 is quite good."

HOUSING STARTS
The nation's home builders were in good holiday spirits through December 2004, maintaining a high level of confidence, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The December HMI edged up from past readings, indicating maintenance of strong builder attitudes in the last three months, the Washington, DC-based NAHB reported. "Builders have every reason for good cheer this holiday season," said NAHB president Bobby Rayburn. "Buyer demand continues to keep builders busy, and builders are happiest when they're busy."