Building & Construction Pros Have Brightest Outlook 

The Sector Leads the Way in Current Growth, Annual Projections in the Q2 2024 Kitchen & Bath Market Index

By NKBA Editorial Staff

While the outlook from most areas of the K&B industry remained relatively flat during the past quarter, the Building & Construction sector continues to be a bright spot. Building & Construction professionals surveyed for the Q2 2024 NKBA/ John Burns Kitchen & Bath Market Index (KBMI) are the most optimistic about growth this year.

Overall, K&B professionals downgraded 2024 revenue growth expectations to 2.7 percent on average – less than half (5.7 percent) compared to the previous quarter — as an anticipated recovery is being pushed out toward year-end. However, Building & Construction firms bucked this trend, holding their full-year 2024 outlook for residential K&B sales growth steady (4.1 Q2 vs. 4.4 Q1).  

Here are some other examples of positive data and sentiment shared by B&C pros:

B&C Growth Helps Offset Retail Losses

The KBMI rated 53.7 on a 100-point scale in Q2 2024, down from 56.3 in Q1 2024. The retail sales segment downgraded its market outlook to 48, down 8.3 points as foot traffic stalled quarter-over-quarter. Building and construction firms remained more positive, outperforming the overall index (58.1, up +2.5 from Q1 2024) – the only sector to show an uptick in the KBMI.

An Increase in Current Activity and Overall Health

The Current Activity Index — a measurement of K&B firms’ reported expanding/ contracting of sales conditions — weakened overall in Q2 2024, particularly in the retail sales and manufacturing segments, as demand softened year-over-year. Building & Construction firms again bucked the trend here, increasing to 52.8 (+4.8 QOQ). Meanwhile, optimism from B&C pros (62, +2.1 QOQ) boosted the Q2 Kitchen and Bath Industry Health Index (Q2 2024), firms’ rating of the overall health of their segment of the industry.

More Completed Projects, Fewer Canceled or Postponed

The Building & Construction sector reported being less impacted by canceled or postponed projects. Its share of planned residential kitchen and bath projects that did not proceed actually declined from the previous quarter (6 percent canceled, 6 percent postponed in Q2 vs. 8 percent canceled, 9 percent postponed in Q1). Completed K&B renovation/construction projects grew by 2.3 percent vs. a year ago following three straight quarters of decline —a positive sign amid an overall inconsistent market.

Larger Projects, Longer Backlogs

Remodelers reported that K&B project sizes/scopes increased in Q2 2024 as wealthier homeowners continue to be more likely to push ahead with projects. Compared to last year, the average project grew either significantly (16 percent) or somewhat (38 percent). K&B renovation and construction backlogs (2.8 months) are relatively low, but stable, for the third consecutive quarter, likely correlating to the prevalence of larger projects that take longer to complete.

Optimism About Annual Growth

More than two-thirds (77 percent) of surveyed companies in the Building & Construction segment expect stable (29 percent) or higher (48) revenue growth in 2024, down slightly from Q1 2024.

“The Building & Construction sector remains bullish, which should be a source of encouragement for the entire K&B industry,” said Bill Darcy, Global President & CEO, NKBA | KBIS. “Despite the challenges of the current economy, K&B professionals across the board generally feel hopeful and our industry remains resilient as we wait for conditions to become more favorable for all homeowners.”

For more insights, download the Q2 2024 NKBA/ John Burns Kitchen & Bath Market Index (KBMI) report here.