New Insights from Kitchen & Bath Market Outlook Update Point to Expected Growth as Economic Conditions Trend More Favorably.
By NKBA Editorial Staff
The K&B sector is still holding remarkably steady as it awaits conditions that should eventually release considerable pent-up homeowner demand for renovation projects. While eager to make home improvements, many are clearly still in a “watch and wait” mode as they eagerly anticipate more favorable borrowing rates and lower consumer prices that will fortify their savings accounts.
These are among the key findings of the NKBA’s 2024 Kitchen & Bath Market Outlook Update, a mid-year, data-informed assessment of the projected size of the residential K&B sector and forecast for the year.
According to the Market Outlook, residential K&B spending is expected to decline 2% to approximately $175 billion this year – a dollar figure that indicates the sector remains healthy, overall, based on historical standards.
Here are some of the additional key insights featured in the Market Outlook Update:
Moderate Dip in New Construction Spending
New construction K&B spend is expected to decline 2% to $108 billion this year due to a number of factors, including a 6% decline in new housing starts. There is a decided shift toward smaller and entry-level home construction, with smaller, value-engineered kitchens and primary baths. An uptick in the share of single-family home construction, along with labor and material inflation, will partially offset declines in new construction spend.
Deferring Larger Renovations, For Now
Repair and remodeling (R&R) spend is forecast to decline 2% to $67 billion, due to the impact 18 months of inflation have had on household savings. Persistent borrowing rates continue to make it challenging for homeowners to tap into home equity, another key source of funding. High-income homeowners, who drove demand for R&R projects last year, are also being cautious. As a result, many major R&R projects are being deferred or broken into smaller jobs.
Growth in Financially Conservative DIY and Low-Spend Projects
Low-spend price point projects are projected to increase by about 10% this year, with DIY spend expected to grow 2% as consumers bide their time by undertaking simpler patch-fixes until they can free up capital for larger remodels. Declines are anticipated across mid (-5%) and high (-8%) tiers due to lack of funding for large remodels and new construction skewing towards smaller entry-level homes. PRO spending is forecast to decrease by 3%.
A Strong, Long-term Outlook
Overall, there is ample reason for optimism about the long-term outlook for the K&B market as economic conditions become more favorable. More than 1.7M homes will enter their prime remodel years over the next four years. Recent homebuyers will look to upgrade new homes they had to settle for, due to affordability constraints. And R&R projects that are now being deferred will only add to demand in the coming years. Meanwhile, homeowners are sitting on record levels of home equity they can leverage once rates become more favorable. Two key indicators point to consumers who are eager to get started: K&B project inquiries improved compared to prior quarters, as have leads for high-end projects.
“This Market Outlook Update reflects the impact of an economy that continues to temper consumer behavior,” said Bill Darcy, NKBA | KBIS Global President & CEO. “However, with the promise of reduced interest rates on the horizon – perhaps within weeks – there is a strong basis for optimism that more homeowners will finally begin to commit to the K&B projects they have been eagerly waiting to pursue.”
To unlock all of this new K&B sector data and insights, download the full Market Outlook Update here.
