’99 Finishing With a Flourish

by WOHe

’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.

Existing-Home Sales
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.

Appliance Shipments
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.

Housing Starts
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.

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