Strength in Housing Fuels Overall Growth

Strength in Housing Fuels Overall Growth






K&BDN Index Down, But Still Strong

The kitchen and bath industry is apparatently mirroring the overall housing market, which remains extremely strong but is losing a bit of steam as 2003 comes to a close.

The "Kitchen & Bath Industry Performance Index" an exclusive gauge of business activity developed by Kitchen & Bath Design News fell to 114.5 this month, off from the highs experienced in August and September (122.5 and 124.6, respectively), but still considered healthy.

The Index started the year at a benchmark level of 100, and had declined to a low of 75.1 in April.

Fluctuations in the Index, which is based on dealer surveys and the latest available economic data, are aimed at providing a snapshot of the vitality of the kitchen and bath market.

Among the weighted components comprising this month's Index were the following:

  • Surveyed kitchen and bath retailers reported an average of 20 prospects during July, up from 18 a month earlier. Sales were also up, from a reported average of 10 during June to 15 in July. The average number of weeks between the time a job was booked and the work actually began was six weeks for both kitchens and baths.
  • The Conference Board's Consumer Confidence Index, which had deteriorated the prior month, rebounded in August. The Index stood at 81.3 (1985=100), up from 77.0 in July. Consumers' six-month expectations gained ground from the previous month. Those anticipating that business conditions will improve over the next six months rose to 22.5%, while those expecting conditions to deteriorate fell to 10.7%.
  • July kitchen cabinet sales were up 15.6% over July 2002 levels, according to the latest "Trend of Business" survey released by the Kitchen Cabinet Manufacturers Association (KCMA). For the first seven months of 2003, kitchen cabinet sales were 10% ahead of 2002's pace (see related Barometers, Page 8).
  • Domestic shipments of major home appliances rose in July over the same month in 2002, while year-to-date shipments in 2003 remained well ahead of last year's record-setting pace through July, according to the Association of Home Appliance Manufacturers.
  • Housing starts dipped slightly from 174,600 units in June to 174,000 units in July. The seasonally adjusted annualized start rate, however, was up 1.5% from June to July, at 1.872 million units. Building permits also dipped from 172,100 units in June to 162,400 in July. The seasonally adjusted annualized rate in July was off 2.4% from June to, 1.78 million units, a pace that was 2.2% of that set in July, 2002.
  • New home sales trailed off slightly to 100,000 units during July. The seasonally adjusted annualized rate for July was 1.17 million units, down 2.9% from June but up 21.2% from July, 2002. Through the first seven months of 2003, some 658,000 new homes have been sold, up 13.3% from the same period last year.
  • Existing home sales reached 619,000 units during July, up 3.7% from June. That translates to a seasonally adjusted annualized rate of 6.12 million units, a record monthly pace, up 5.0% from June and up 13.8% from July, 2002.
  • Stock prices for firms involved in the kitchen/bath industry were up 3.9% in July and up 5.8% in August. By comparison, the Dow Jones Industrial Average was up 2.1% in July and 2.9% in August.