Elevated Building Material Costs and Skilled Labor Shortage are Among the Ongoing Obstacles to Activating Demand
By NKBA Editorial Staff
The Kitchen & Bath industry continues to experience restrained growth as consumer uncertainty – especially in the entry-level market – and elevated building material costs remain major obstacles to activating demand, according to the results of the 1Q26 Kitchen and Bath Market Index (KBMI). Firms are projecting low-to-mid-single-digit growth in 2026, with retailers expressing the most optimistic view (+6%) and manufacturing segment companies reporting the most cautious outlook (+1.8%).
For the second consecutive quarter, the Kitchen & Bath Market Index rated 55 out of 100, an indication of flat K&B industry activity and unchanged sentiment about the industry’s overall economic health. The building & remodeling segment was the only sector that reported year-over-year sales growth during the past quarter.
The 1Q26 Kitchen and Bath Market Index (KBMI) report, conducted jointly by the NKBA and John Burns Research and Consulting, reflects findings from 651 NKBA members across four segments: design, building and remodeling, retail, and manufacturing.
Here are some other notable insights:
Consumer uncertainty persists, tariff concerns recede
Nearly half (48%) of surveyed K&B pros said consumer uncertainty was the leading constraint to growth over the next six months, a slight uptick over the previous quarter (46%). Rising building material costs, a byproduct of tariff policies, was the next most prominent issue (30%). That number was down slightly (-3%) from the 4Q25, as significantly fewer cited concerns about the impact of tariffs and trade policies (28%, down from 40% in 4Q25). Concerns about labor costs also eased.
Skilled labor shortages continue to limit growth
The skilled labor shortage is having a tangible impact on the ability of K&B firms to realize growth opportunities. While project backlogs increased slightly, indicating firms are seeing more incoming leads, more than half of K&B firms expect labor shortages will either moderately (45%) or significantly (6%) affect their ability to take on new projects in the coming year.
Prices continue to rise
K&B firms reported that their pricing rose +4.3% YOY on average, while easing tariff pressures meant margin pressures also eased slightly in 1Q26. Retailers, for example, reported raising their prices by +4.8% as input costs rose by +6.3% YOY on average. More than 60% of respondents reported flat gross margins, while 18% said they had higher margins compared to a year ago. Still, K&B product pricing clearly remained impacted by tariff-related cost pressures.
Entry-level hesitation, luxury market resilience
Across the K&B industry, premium and midrange K&B consumer demand was in the “normal” range in 1Q26, while the entry-level segment remained weaker. Higher construction project costs are causing many uncertain consumers to hold back. Meanwhile, many firms report that the luxury market remains reliable. During the previous quarter, building and remodeling firms said that more consumers were shifting to higher price points and larger projects.
“K&B professionals told us that many of the same challenges continued to impact their bottom line during the first quarter of 2026,” said Bill Darcy, Global President & CEO, NKBA I KBIS. “While the level of concern over tariffs eased a bit, elevated costs are still the number one driver of consumer hesitancy, inhibiting the entry- and mid-level project growth that is so important to overall industry growth.”
To access all of this valuable data and insights, download and read the full 1Q26 Kitchen & Bath Market Index report.
