Market Slowdown Seen as Temporary
Unusually poor weather across much of the nation,
combined with lingering economic weakness and the war in Iraq,
contributed to a first-quarter slowdown in housing and related
markets. Nevertheless, market fundamentals remain solid and 2003
should prove to be a positive year from a historical perspective,
according to the latest round of economic indicators. Among the key
statistics released by government agencies, research firms and
industry-related trade associations in recent weeks were the
CABINET & VANITY SALES
NEW- & EXISTING-HOME SALES
K&BDN Monthly Index Posts Increase
After dropping significantly last month, the "Kitchen & Bath Industry Performance Index" improved slightly this month an indicator that industry activity may pick up again as the weather grows warmer.
The "Kitchen & Bath Industry Performance Index" an exclusive monthly Index developed by K&BDN and introduced in January rose this month to 79.34. It started the year at a benchmark level of 100, and had fallen to a low of 75.1 in April, as showroom prospects, appliance shipments, existing home sales and building permits lagged previous months' levels.
Fluctuations in the Index, which is based on dealer surveys and the latest available economic data, are aimed at providing a snapshot of the relative vitality of the kitchen/bath market (see Editor's Note, below).
While much of the recent weakness in the market has been tied to the conflict in the Mideast, some analysts warn that even a fast and decisive resolution of the war with Iraq might not produce more than a short-lived boost. Of far more long-term importance for a true recovery, they point out, are economic fundamentals and a rise in consumer confidence.
Among the weighted components comprising this month's Index were the following:
Surveyed kitchen and bath retailers reported an average of ten prospects and six sales closed for the month of February, 2003. Both marks were down slightly from January averages. Survey respondents reported that the average price of a kitchen remodeling job booked during the month was $49,052, and that the average price of a bath remodeling was $17,313. Both of those marks were above the January reported average, and indicate that the strongest side of the market is the high-end niche.
Sales of kitchen cabinets and bathroom vanities rose 11.6% in February over the same month a year earlier, with semi-custom sales up 68.1%, custom sales up 3.9.% and stock cabinet sales down 9.2%.
Domestic shipments of kitchen appliances rebounded sharply, with 3.2 million units shipped during February, up 1.9% from February of 2002 and up 35.7% from January of this year.
The Conference Board's Consumer Confidence Index, which declined sharply last month, fell again in March. The Index now stands at 62.5 (1985=100), down from 64.8 in February. Consumers' appraisal of the current business environment mirrored the previous month's readings.
Unemployment held steady in March, at 5.8%.
Housing starts dipped 8.1% during February although, for the month, the seasonally adjusted annualized rate topped a robust 1.6 million units. Through the first two months of the year, 225,600 new homes have been started, down 2.3% from last year.
Existing-home sales for February totaled 345,000 units, down 0.6% from January but up 1.5% over February of 2002.
New home sales hit 75,000 units during February, up 7.1% from January but down 10.7% from February, 2002.
The national average commitment for a 30-year, conventional, fixed rate mortgage at press time was 5.79%. According to the Mortgage Bankers Association of America, mortgage applications had dipped 17% during the latest reporting period, and refinancing rates had fallen 20%, but both measures remained relatively high.