Market Stays Solid Through the Summer
The kitchen and bath market, bolstered by continued strength in the nation's housing market, continued to perform well through the summer. Among the key statistics released by government agencies, research firms and industry-related trade associations in recent weeks were the following:
Despite cooling in June from the torrid and "unsustainable" levels posted earlier this year, housing starts "continue to remain solid and market fundamentals remain healthy, with strong consumer demand, lean inventories and a favorable interest rate structure," the president of the National Association of Home Builders said last month. Bobby Rayburn, president of the Washington, DC-based NAHB observed that builder surveys "indicate that they are very confident about the future," despite the 8.5% June drop in housing starts, to just above 1.8 million units. "While the June figure is a bit of a surprise, it's still quite strong by historical standards. In fact, we expect single-family starts will post an all-time high in 2004, surpassing last year's record of 1.499 million units," said NAHB chief economist David Seiders.
Interest rates are rising due to "healthy economic growth," but they will not dampen the general strength of the nation's housing market, according to the National Association of Realtors. David Lereah, chief economist for the Washington, DC-based NAR, predicted that mortgage interest rates "will remain very favorable in historic terms for the foreseeable future." He forecasted that existing-home sales would hit a record 6.31 million units this year, up 3.4% from the record level achieved in 2003.
The market for second homes "is heating up" among the nation's more affluent home buyers, according to the results of a recent survey conducted by Centex Destination Properties, the second home and resort arm of Centex Homes. According to the Internet poll, one in four of those surveyed indicated some interest in purchasing a vacation home over the next two to three years. Almost all the surveyed households had annual incomes of at least $125,000; respondents were at a median age of 45; 87% were already homeowners. According to projections, the number of households with $125,000 incomes will increase from 7.5 million in 2000 to 14.6 million by 2009. The researchers said they expect the primary market for potential second-home buyers to double, from 5.8 million in 2000 to 11.4 million in 2009. A Census Bureau survey similarly revealed that seasonal and occasional housing as a percentage of all housing units has been ticking up, from 4% in 1987 to 4.7% in 2003.
CABINET & VANITY SALES
Sales of kitchen cabinets and bathroom vanities increased 23.5% in June 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 year-to-date sales for the first six months of 2004 were running 18.9% over sales in January through June of 2003.
Demand Seen Rising for Plumbing Products, Cast Polymers through 2008
Cleveland, OH U.S. demand for plumbing products and cast polymer materials is being projected to increase at a steady rate through 2008 according to a pair of new research studies. The studies forecast that demand for plumbing fittings and fixtures will rise 3% per year through 2008, to $9.6 billion, while demand for cast polymers will advance 5% per year, to 205 million sq. ft. in 2008 (see related table, above). Both studies were released this summer by The Freedonia Group, a Cleveland-based industrial market research firm.
Among the conclusions of the two studies were the following:
- Demand for plumbing fixtures, boosted by a trend toward "higher-value fixtures such as whirlpool baths and hot tubs," is expected to reach $4.6 billion in 2008. At the same time, plumbing fittings demand is expected to exceed $5 billion in 2008, fueled by above-average growth in lavatory fittings, kitchen and other sink fittings. Also supporting demand will be a continuing trend toward larger bathrooms and kitchens.
- In residential countertops, cast polymers will continue to gain market share at the expense of laminate and tile.
- Demand for engineered stone (available in quartz or marble) is expected to register strong growth of 8.8% per year, to 55 million sq. ft. in 2008, and will account for more than 25% of cast polymer sales in 2008. Solid surface materials will continue to account for the largest share of cast polymer sales with 45% in 2008, and "will record respectable gains."
- The residential countertop market accounted for more than 60% of cast polymer applications in 2003, but the industry continues to develop additional applications. Gains are projected for less-established end uses such as shower pans, wet walls and bath accessories, as well as sinks, bathtubs, flooring and drawer pulls.