Slowdown Not Viewed as Negative

by WOHe

Slowdown Not Viewed as

The kitchen and bath market began feeling the first tangible
effects of the long-expected slowdown as the third quarter of 2000
reached its midway point, although industry activity remained
generally robust. The slowdown, resulting from Federal Reserve
actions to dampen economic growth, was evidenced in housing starts,
home sales, remodeling activity and product shipments.

Among the key statistics released by government agencies and
industry-related trade associations in recent weeks were the

Home Sales
Existing single-family home sales in 2000 will be down more than 9%
from the record volume posted in 1999, “but still at fairly high
levels in historic terms,” the National Association of Realtors
reported last month. The Washington, DC-based NAR said that,
despite higher mortgage rates and dwindling inventories, home
resales through June were only 6.4% below the 5.59-million sales
pace reached in June of 1999 the highest level ever recorded. Both
housing starts and home sales are expected to decline in 2000 as a
result of the Federal Reserve’s series of interest-rate increases.
However, a gradual slowing in the housing sector “is good news for
everyone, as it takes pressure off the Federal Reserve to tighten
monetary policy,” the NAR observed.

Appliance Shipments
Domestic shipments of major home appliances, exhibiting their first
sign of weakness in months, declined in July compared to the same
month in 1999, although year-to-date sales remained up over last
year, the Association of Home Appliance Manufacturers reported.
According to the Chicago-based AHAM, July shipments totaled 4.49
million units, down 9.8% from the 4.98 million units shipped in
July of ’99. However, year-to-date appliance shipments from January
through July were up 6.1% over shipments in the same seven-month
period a year earlier, AHAM reported. The July sales declines
affected virtually all appliance categories, including food
preservation (down 8.1%), home laundry (down 5.3%) and cooking
(down 1%). The largest drop, however, came in the weather-related
area of home comfort appliances, AHAM noted, adding that kitchen
cleanup appliances actually rose 1.2%, even in the face of all the

Cabinet & Vanity Sales
Sales of kitchen cabinets and bathroom vanities increased 7.6% in
July over the same month in 1999, beginning the third quarter of
2000 in a positive fashion, the Kitchen Cabinet Manufacturers
Association reported. The Reston, VA-based KCMA noted that
manufacturers participating in the association’s monthly “Trend of
Business” survey reported that sales gains led by sales of custom
cabinets were up 9.8% year-to-date through July, compared to the
same seven-month period in ’99.

Remodeling Expenditures
Remodeling expenditures by U.S. homeowners dipped during the second
quarter of 2000, as higher interest rates began to take their toll
on remodeling activity, according to a report issued by the Joint
Center for Housing Studies at Harvard University (JCHS). The JCHS
reported that the seasonally-adjusted annual rate of remodeling
expenditures dropped 4.2%, to $97.4 billion, from the published
first-quarter figure of $103.7 billion. For the future, however,
the JCHS still predicted that, “even though the second-quarter
figure dipped, we feel that we will see modest growth in homeowner
remodeling activity throughout the remainder of the year.”

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