Uncertainties Fail To Dampen Market

by WOHe

Uncertainties Fail To Dampen Market

Against a backdrop of the war on terrorism and shaky consumer
confidence, the housing market and related kitchen/bath sector
continue to post impressive results, with 2002 witnessing new
annual highs on a number of fronts. Among the key statistics
released by government agencies, research firms and
industry-related trade associations in recent weeks were the

The projected economic and financial market environment “should
support a healthy housing market” this year and in 2004, with total
housing starts ranging between 1.62 and 1.63 million units each of
the two years, the National Association of Home Builders projected
last month (see related Forecast 2003 coverage, Pages 52-56).
According to David Seiders, chief economist for the Washington,
DC-based NAHB, the next two years will follow what was an
“unsustainably high rate” for housing starts of close to 1.7
million units last year. In fact, housing starts surged to an
annual rate of 1.84 million units in September of 2002, the highest
rate since June of 1986, the NAHB reported. “Single-family starts
should continue to account for nearly 80% of the total, and the
nation’s homeownership rate should resume an upward trend,”
following a modest, recession-provoked setback in the first half of
2002, Seiders observed.

As 2002 came to a close, the housing market was “still hot, with
both new- and existing-home sales increasing,” the National
Association of Realtors reported in November. According to David
Lereah, chief economist for the Washington, DC-based NAR, 2002 will
wind up producing a record for existing-home sales, with resales
projected to register 5.47 million units up from the previous
record of 5.29 million existing homes sold in 2001. At the same
time, new-home sales will also post a record in 2002, with 929,000
homes sold up from the previous record of 908,000 in 2001. “Perhaps
most importantly, the nation’s homeownership rate continues to
hover near a record 68%,” Lereah noted.

Sales of kitchen cabinets and bathroom vanities increased 14% in
October of 2002, compared to October of the previous year, the
Kitchen Cabinet Manufacturers Association said last month. The
Reston, VA-based KCMA noted that manufacturers participating in the
association’s monthly “Trend of Business” survey reported that
stock cabinet sales were up 12% in October, while semi-custom
cabinet sales rose 27% and custom cabinet sales posted a 1%
decline, the KCMA said. Year-to-date sales from January through
October of 2002 were up 11.7% over the same 10-month period in the
previous year, the KCMA added.

Domestic shipments of major home appliances through October of 2002
were running 4.9% higher than the same 10-month period a year
earlier, as appliance shipments continued to mirror forecasts for a
new annual record, the Association of Home Appliance Manufacturers
reported. According to the Washington, DC-based AHAM, some 56.08
million appliances were shipped from January through October, up
from the 53.47 million that were shipped over the same time span in
2001. Appliance shipments were running ahead of the previous year
in virtually all product categories including cooking, kitchen
cleanup, food preservation and home laundry according to AHAM,
which had forecast that 2002 shipments would total some 67.5
million units, up from the 64.6 million units shipped in 2001.

Market Analysis

U.S. Housing Market Seen Varying Widely by Region in

Washington, DC The U.S. housing market, coming off unsustainably
high levels in 2002, will witness a decline in housing starts this
year although the pattern of starts will vary by state, depending
on regional conditions.

That’s the view of Stanley Duobinis, director of forecasting for
the Washington, DC-based National Association of Home Builders.
Addressing representatives of the building products industry at the
NAHB’s recent Semi-Annual Construction Conference here, Duobinis
forecast that the housing industry “will see both growing housing
markets and declining ones in 2003, just as we did in 2002.”

The most active markets continue to be in the Southeast and
West, with some notable weakness among some “high-tech” states,
Duobinis said, noting that local housing demand “is a function of
local household creation, as well as special factors such as second
home demand.”

“And, household creation depends on job creation,” he said.
“Ultimately, high rates of job creation translate into good housing

Although the recession “has been over for a while and the number
of states seeing year-over-year job growth is growing, that growth
is still ‘sluggish,’ ” Duobinis pointed out, noting that, from
September of 2001 to September of 2002, employment grew in just 14

The most rapidly-expanding housing states from September 2001 to
September 2002 included Nevada, Arizona, Kentucky, Montana,
Oklahoma, Rhode Island, Wisconsin, New Mexico, Florida and Texas.
Among the weakest states over the same time span were Utah,
Colorado, Georgia, Missouri and Washington.

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