Higher Prices and Lower Expectations as Many Homeowners Remain Cautious
By NKBA I KBIS Editorial Staff
The kitchen & bath industry is facing significant challenges due to the impact of macroeconomic pressures led by tariffs and continued consumer uncertainty. This difficult environment for growth is reflected in the data and insights featured in the 3Q25 NKBA/John Burns Kitchen & Bath Market Index (KBMI) report.
The KBMI rated 50 out of 100 in 3Q25, down from 53 in Q2 – the third straight quarter of declining growth and the lowest survey result since 2Q20. Overall, the index indicates that K&B industry activity is generally flat.
Higher building material costs (44%), a byproduct of rising tariffs, were cited as the third most impactful constraint to growth after tariffs/trade issues and consumer uncertainty in the latest survey of 530 NKBA members across the design, building and remodeling, retail sales, and manufacturing segments. Nearly one-third of industry pros highlighted labor costs as a key impediment to growth.
Here are some additional insights into the current state of the K&B industry:
Decreased sales, downgraded expectations
Overall, K&B industry sales declined by -4% year-over-year during the last quarter. Price increases during 3Q25 mean that sales volumes were likely in even more negative territory.
K&B project cancellations and postponements remained elevated in 3Q25, indicating that many homeowners are generally cautious about embarking on major projects.
While kitchen and bath professionals expect sales conditions to improve over the next quarter, these ratings have declined from 2Q25. The Retail (-1.5%) and Building & Remodeling (-0.8%) sectors were most cautious, slightly downgrading their expectations for growth for the remainder of the year.
Tariffs mean higher prices and lower margins
Tariff cost concerns compelled K&B firms to increase prices by 4.6% YOY on average during 3Q25. Margins declined in last quarter, in large part due to the effects of tariffs – 28% of firms reported lower gross margins compared to the same quarter last year. Manufacturing and retail sales firms reported feeling the strongest margin pressure, relative to the rest of the K&B industry.
Luxury activity holds steady
The luxury market is still a source of stability for the industry. Luxury/premium consumers, less sensitive to higher project costs, outperformed slightly in the third quarter. While the value-oriented and mid-range consumer segments spent less in 3Q25, purchasing trends in the luxury segment were more positive.
Cautious optimism for 2026
Despite all of the factors working against growth, the industry outlook for 2026 still projects mid-single-digit growth, averaging 4.5%. Manufacturing (6.1%) and design (5.8%) firms, in particular, remain optimistic about expected resilience in premium consumer spending.
“We continue to closely monitor and assess the implications of tariff policies on the kitchen & bath industry,” said Bill Darcy, NKBA | KBIS global president & CEO. “We’re focused on providing our members with insights and tools to stay the course and maximize growth opportunities until conditions become more favorable.”
Download and read the full 3Q25 KBMI report for more insights and data on the state of the K&B market.
