Market Continues Impressive Resilience
There are few signs that the faltering U.S. economy is seriously
impacting the housing and kitchen/bath markets, as residential
construction continues to demonstrate strength in the face of
economic erosion. Among the key statistics released by government
agencies and industry-related trade associations in recent weeks
A surge in multi-family housing starts, as well as an increase in
single-family starts, were among the highlights of the latest round
of positive housing market statistics, the National Association of
Home Builders reported. Noting that residential fixed investment
grew at a rate of 7.4% in the second quarter, the NAHB reported
that, in July 2001, the actual number of housing units started
155,400 was greater than for any calendar month since the summer of
1998. The association added that it is “quite likely” that
single-family starts for all of 2001 will be greater than the
annual total of 1.231 million in 2000. New-home sales, which remain
“robust,” will easily exceed the record of 885,000 in 1998, the
Even with homeownership rates continuing at near-record levels most
Americans think it’s a good time to buy a home, compared to a year
ago. According to the 10th annual Fannie Mae National Housing
Survey, 29% of those surveyed thought that now is a very good time
to buy a home. Only 19% shared those feelings when the survey was
conducted in 2000. One in four respondents said they were very
likely to buy a home in the next three years, while 43% of renters
said it was likely they would purchase a home in the next three
years. “Down payment and closing costs are perceived as less of an
obstacle to homeownership than in the past,” observed the National
Association of Realtors.
Cabinet & vanity sales
Sales of kitchen cabinets and bathroom vanities rose again in July,
increasing 8.9% over sales in July of 2000, according to the
Kitchen Cabinet Manufacturers Association. The Reston, VA-based
KCMA said last month that manufacturers participating in the
association’s monthly “Trend of Business” survey reported that
year- to-date cabinet sales through the first seven months of 2001
were up 2.7% over those of the same January-July time period last
year. Sales of stock cabinets year-to-date were up by 1.4%, while
sales of custom cabinets were up by 10.8%.
Kitchen and bath products including countertops and cabinet/vanity
surfaces will continue to account for the largest shares of the
U.S. decorative laminate market, although the most rapidly growing
market segment will remain laminate flooring. That’s the conclusion
of a new study released last month by The Freedonia Group, Inc., a
Cleveland, OH-based industrial market research firm. The firm
forecast that U.S. demand for decorative laminate will increase
5.3% annually, to 15.4 billion sq. ft. by the year 2005. The
current market is about 12 billion sq. ft., The Freedonia Group
reported. Gains will be most pronounced in high-pressure laminate,
as opposed to low-pressure laminate and edgebanding, The Freedonia
Group noted. “This rapid growth is due in large part to [projected]
double-digit growth in laminate flooring,” the firm said, adding
that kitchen and bath countertops are another area where
high-pressure laminate is seeing strong advances.
Survey: Remodeling Market ‘Holding Steady’
The remodeling market “remained steady” for the first two
quarters of 2001, but is starting to show signs of slowing down,
according to a new survey conducted by the National Association of
The survey, based on the responses of some 1,500 remodelers,
forms the basis of the NAHB’s Remodeling Market Index (RMI), a new
quarterly economic index created to measure current and future
activity in the remodeling market. Remodeling activity currently
accounts for about 2% of the nation’s Gross Domestic Product (GDP),
and roughly 60% of total spending on housing, the NAHB observed.
The association is forecasting that remodeling expenditures will
exceed $159 billion this year, and rise to more than $167 billion
in 2002 (see graph above).
The RMI for current market conditions for the first two quarters
of this year remained steady, with a 55 rating, the NAHB said.
Future expectations for remodeling remained virtually flat, at a
rating of 57 for this same time period.
The current remodeling index is based on responses regarding the
existing demand for remodeling compared to three months earlier.
The future expectations index is based on questions that ask for
the volume of “calls for bid,” the amount of work committed for the
next three months, the backlog of remodeling jobs and the number of
proposals for future work.
Between the first and second quarter of this year, the ratings for
current market conditions declined in three of the Census regions
of the country, except for the Midwest, where the rating increased
from 53.3 to 55.6. The largest drop occurred in the Northeast,
where the rating fell from 63.2 to 58.1.
Ratings for future remodeling market expectations declined from
the first quarter to the second quarter during the first half of
the year by more than four points in the Northeast, from 66.4 to
62.0, and by nearly five points in the West, from 59.2 to 54.4.
Ratings for the Midwest increased from 54.2 to 58.1, while they
increased for the South from 55.7 to 56.7 for this same time