'99 Finishing With a Flourish
Even in the face of an imminent modest slowdown in 2000, the kitchen/bath, housing and remodeling markets seemed to be finishing 1999 with the same positive momentum they exhibited throughout the year, according to the latest product-shipment and forecast figures released by the government and industry-related trade associations. Among the industry's key statistical-related developments in recent weeks were the following:
Cabinet & Vanity Sales
Sales of kitchen cabinets and bathroom vanities, led largely by a substantial gain in sales of custom cabinets, rose 5.8% in October of 1999 over the same month a year earlier, according to the Kitchen Cabinet Manufacturers Association. The Reston, VA-based KCMA said that manufacturer-members participating in the trade association's monthly "Trend of Business Survey" also reported that cabinet sales year-to-date through October were running 13% ahead of the same 10-month period in 1998. Custom cabinet sales rose 11.3% in October of '99 over October of '98, while sales of stock cabinets were up 4.9%, the KCMA said.
As 1999 wound to a close, housing analysts were predicting that existing-home sales would reach a record level of nearly 5.2 million units for the year, although speculation is that the market will weaken somewhat in 2000. According to the National Association of Realtors, as the fourth quarter of 1999 began, existing-home sales being fueled by a strong job market were running some 6.7% ahead of the same period in 1998. However, "recent volatility in the stock market, waning consumer confidence and fears of inflation will serve as a check to home sales in the future," the NAR predicted. The Washington, DC-based trade association is forecasting that existing-home sales will dip in 2000 to just below 5 million units, even though mortgage rates are expected to decline.
Domestic shipments of major home appliances rose 7.3% in October of 1999, and were running 9.7% over the first 10 months of 1998 from January through October, the Association of Home Appliance Manufacturers reported. According to the Chicago-based AHAM, shipments for the first 10 months of 1999 totaled some 52.2 million units, up from the 47.6 million units that were shipped in a similar time frame in 1998. Increases for the 10-month period were reported in every product category, including home laundry (+8.6%), kitchen cleanup (+8.4%), cooking (+6.2%) and food preservation (+5.6%), according to AHAM.
The nation's home builders "don't see the bottom dropping out of the [housing] market," even though home starts are expected to moderate in 2000, the National Association of Home Builders reported last month. The Washington, DC-based NAHB said that its latest monthly survey of home builders revealed that, as of early November 1999, builders were not experiencing nor expecting to experience a slowdown in home sales. The NAHB is forecasting a 7.5% decline in housing starts this year, to 1.54 million units.
West, South Seen as Robust Regions in 2000
Washington, DC While a general economic slowdown and higher mortgage rates will take housing out of the fast lane in 2000, the West and South can expect to perform better than the nation as a whole because of solid employment and population growth, two leading economists say.
Speaking at the recent National Association of Home Builders Construction Fore-cast Conference, Stanley Duobinis, the NAHB's director of forecasting and Sara Johnson, chief regional economist at Standard & Poor's DRI, each agreed that California's late recovery from the last recession and big population gains in warm weather states mean that there will be room to grow in those markets.
The two economists also agreed that conditions in the Northeast particularly New York, Pennsylvania and the southern New England states are not nearly as rosy.
Johnson picked the Pacific Southwest as the top region for new residential construction in 2000-2001, as the fastest growth in high-tech employment shifts back to that area. Both she and Duobinis said they were concerned that the Midwest will have difficulty in attracting the skilled workers it needs in the coming year.
Johnson said that the sharpest employment growth in the next several years will take place ion Nevada, Arizona, Florida, Colorado, Utah, Texas, California and Georgia.