Market Strong, But Off Record Highs

Market Strong, But Off Record Highs

Market Posts Gain, K&BDN Index Reveals

The kitchen and bath industry continues to exhibit stability and resilience even in the face of economic and global uncertainties, according to a new monthly Index developed by Kitchen & Bath Design News.

The "Kitchen & Bath Industry Performance Index," unveiled for the first time last month exclusively by K&BDN, reveals that the kitchen and bath market improved this month from 30 days earlier.
The Index registered 99.6 this month just a shade under the benchmark of 100 established for January. By comparison, it registered 95.2 in February.

Fluctuations in the Index, which is based on dealer surveys and the latest available economic data, are aimed at providing a regular glimpse at the relative vitality of the kitchen and bath market (see Editor's Note, below).

Among the weighted components in the March Index were the following:

• Surveyed kitchen and bath retailers reported an average of 14 sales prospects and three sales for the month of December, 2002. Both were below November's levels primarily as the result of normal seasonal differences. Survey respondents reported that the average price of a kitchen remodeling job booked during the month was $27,066, and that the average price of a bath remodeling job was $8,224.
   
• The Consumer Confidence Index dipped slightly in December 2002, from levels 30 days earlier. Some 20.8% of consumers polled by The Conference Board in its monthly survey expected business conditions to improve in the next six months, while 11% expected conditions to get worse.
   
• Sales of kitchen cabinets and bathroom vanities rose 9.5% in December 2002 over the same month a year earlier, and were up 10.8% for the full year. Although major home appliance shipments dipped slightly in December from the same month a year earlier, they were still 15.1% above November levels.
   
• Unemployment remained at 6% in December. However, 20.2% of the consumers in the Consumer Confidence survey expected fewer jobs in the coming six months, an increase over the previous month, while only 15.1% anticipated more.
   
• Aggregate stock prices for firms involved in the kitchen and bath industry lost ground in January, 2003, as investors continued to be uncertain and skittish (see related StockWatch, Page 10).
   
• Housing starts in December were slightly below November's totals, but the seasonally adjusted rate of starts was 15.9% above the pace for December, 2001. There were just over 1.7 million housing starts in 2002, 6.4% above 2001 levels. Building permits were up 6.3% from November to December, and ended the year 5.5% above 2001, at nearly 1.73 million permits issued.
   
• Existing-home sales jumped 5.8% from November to December and ended the year up 5.0% at 5.56 million units sold. New homes sold dipped slightly but still ended the year up 7.0%, at a new record 976,000 units.
   
• The national average commitment for a 30-year, conventional, fixed rate mortgage at press time was 5.88%.
   
• Lowe's announced it expects a 16%-17% sales increase and a 2%-4% gain in same-store sales in the fourth quarter of 2002. At Home Depot, however, sales projections for 2003 were lowered to a 9%-12% increase from earlier estimated gains of 15%-18%.

Editor's Note: Kitchen & Bath Design News' Kitchen & Bath Industry Monthly Performance Index," introduced last month, is aimed at providing an ongoing comparative measurement of kitchen/bath market vitality.

K&BDN developed the new Index based on a number of key economic and business performance components. Weighted scores for each of those components have then been used to calculate the Index, which was set for benchmark purposes at 100 for January.

Future fluctuations in the Index will be compared to the benchmark number posted in January.