Positive Results Continuing in ’99

by WOHe

Positive Results Continuing in
’99


The new year opened in much the same fashion as the way the old
year closed, as the overall U.S. economy continues to expand, and
continued strength is reported in virtually all the kitchen and
bath industry’s key economic indicators, the latest government and
trade association figures reveal.

Among the industry’s key statistical-related developments in recent
weeks were the following:

Cabinet & Vanity Sales
Cabinet
manufacturers had a stellar year in 1998, with sales rising 12.6%
over the previous year – the result of 12 months of steady industry
growth – according to the Kitchen Cabinet Manufacturers
Association. The Reston, VA-based trade association said that the
78 manufacturer-members participating in the KCMA’s monthly “Trends
of Business Survey” reported that 1998 finished on an especially
strong note, with December ’98 sales of kitchen cabinets and
bathroom vanities up 16.5% over the same month a year earlier. For
the year, manufacturers of both stock and custom cabinetry
experienced double-digit sales growth, with stock cabinet sales up
12.7% and custom cabinets up 12.1%, the KCMA reported. In addition,
sales for January 1999 were up as well – rising 12.9% over January
1998, the association said. “The cabinet industry has recorded 34
consecutive months of growth in sales since the winter of 1996,”
noted KCMA executive v.p. Dick Titus, who added that the longest
period of steady industry growth
was a 61-month run, from Nov. 1982 to Nov. 1987.

Existing-Home Sales
Existing-home sales, dubbed by one leading analyst as “perhaps the
brightest star” in the U.S. economy, rose once again to record
levels in January, the National Association of Realtors reported.
According to the Washington, DC-based NAR, existing-home sales rose
to an annualized rate of 5.07 million units in January, above even
the “incredible” rate of 5.03 million units posted in December
1998. The December rate of sales helped the “red-hot” resale market
post an annual rate of 4.78 million units – a 13.5% gain over 1997
and the highest sales total on record, the NAR said.

Housing Starts, Home Sales
Housing starts and building permits were sharply above expected
levels in January as the housing market continued to exhibit the
same strength it had in 1998, according to the latest government
figures. Commerce Dept. figures revealed that new home construction
surged to a 12-year high in January, with housing starts posting a
seasonally adjusted annual rate of 1.804 million units, versus a
consensus forecast of about 1.7 million units; similarly, building
permits – an indicator of future housing activity – posted a
1.777-million annualized number, well above the earlier projection
of 1.67 million. The positive momentum generated by a robust 1998
will probably carry over well into 1999, although the growth rate
of key kitchen and bath industry barometers is facing an inevitable
slowdown, according to housing and industry-related analysts. While
1999 should be another favorable year, analysts say, such key
market forces as housing starts and home sales are expected to
weaken from their torrid ’98 pace, dampening kitchen and bath
product shipments – even as those shipments remain at historically
high levels.
Housing Market Seen
Slowing a Bit

Washington, DC – The problem of having the best
economy in years “is that it is a tough act to follow.” The outlook
for the housing market this year remains upbeat and historically
strong, even though “it won’t be as impressive as it was in
1998.”

That’s the view of Orawin Velz, managing director of the National
Association of Realtors. Velz pointed out that the U.S. housing
market – bolstered by a strong underlying economy – experienced “a
banner year” in 1998, posting major gains in such key indicators as
housing starts and new- and existing-home sales.

However, “you can’t expect to beat a 70-home-run record every year,
can you?” Velz observed. He predicted that overall economic growth
should be “solid for much of the first half of this year,” although
a slowdown is likely to take place later in the year.

Velz noted, nevertheless, that solid labor markets, a strong stock
market, low core inflation, and especially low mortgage rates will
be the keys to “continued resilience in the housing sector.”

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