Industry Pros Share Important Insights into Growth Constraints, Margin Pressures and a Consumer Shift to Smaller Projects
A deeper dive into the NKBA / John Burns Q2 2025 Kitchen & Bath Market Index (KBMI) Report reveals some key insights about underlying factors that help explain why the kitchen and bath industry is experiencing only modest growth despite significant, sustained demand.
Here is what K&B industry pros are saying about the current market:
Consumer uncertainty, tariffs are major growth constraints
Two interrelated factors were, far and away, most cited by K&B professionals as the top constraints to short-term growth: consumer uncertainty (56%) and tariffs/trade issues (52%). Another important part of the picture is rising building materials costs, which more than a third of the surveyed pros (39%) said are negatively impacting demand.
Rising labor costs (32%), skilled labor shortages (30%), higher interest rates (26%) and weak existing home sales (22%) were also mentioned by many as factors holding back growth.
Market pressures lead to declining margins
K&B margins declined in Q2 2025 as many firms struggled to pass on costs, feeling the impact of market pressures including tariffs and higher labor costs while trying to keep prices down as long as possible. One quarter (25%) of surveyed firms said they had lower gross margins than a year ago, up from 21% in Q1 2025 and 20% in Q2 2024. Design (29%) and manufacturing (27%) pros cited the highest margin pressures of the four surveyed sectors.
Smaller projects, less expensive materials
More consumers, looking to contain out-of-pocket costs, downgraded the scope and material quality of K&B projects in Q2 2025, according to design sector professionals. Of those surveyed, twenty percent said the average size/scope of projects compared to last year “somewhat decreased,” while seven percent said it had “significantly decreased” – up notably from 2% last quarter. Meanwhile, one-third of firms (33%) reported that consumers downgraded to lower-grade products in Q2 2025, the highest share since the KBMI started tracking this measure.
“Hopefully we will see this intense period of consumer uncertainty start to ease as the full impact of tariff policies and the potential for borrowing rate decreases comes into fuller focus,” said Bill Darcy, Global President & CEO of NKBA | KBIS. “This clarity should help unlock built-up demand and positively impact K&B firms’ growth prospects heading into next year.”
Download and read the complete report for more insights and data on the state of the K&B market.
