Latest Kitchen & Bath Market Index (KBMI) Dips Slightly, but Still Reflects Modest Growth in 2024
By NKBA Editorial Staff
The narrative emerging from the most recent research by NKBA | KBIS, including the new Q2 2024 NKBA/John Burns Kitchen & Bath Market Index (KBMI), remains remarkably consistent: ongoing uncertainty about economic conditions is making most consumers extremely cautious about big purchases, including major kitchen and bath renovations. This has translated into an increasingly static market and K&B professionals downgraded their 2024 revenue growth expectations to 2.7 percent year-over-year (YOY) on average, compared to 5.7 percent in Q1. One exception is building and construction firms, which held their full-year 2024 outlook steady.
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In Q2 2024, the KBMI Index rated 54 out of 100, down two points from the previous quarter, reflecting modest expansion in the sector. Conducted jointly by the National Kitchen & Bath Association and John Burns Research and Consulting, the KBMI report includes data and insights from NKBA members across four segments: design, building and construction, retail and manufacturing.
Here are some additional key highlights from the Q2 2024 KBMI report:
Muted Sales Activity
Sales of new K&B projects and services increased 0.9 percent YOY in Q2 2024, although with prices growing by a larger amount, this signals low-single-digit negative volume. K&B retailers reported that foot traffic declined 5 percent quarter-over-quarter (QOQ) amid inconsistent demand. Many brick-and-mortar retailers cited intense competition from online retailers.
Rising Prices, Across the Board
K&B firms reported that their suppliers raised prices by 3.9 percent YOY in Q2 2024, up from 3.4 percent in Q1. Markups were highest for hardware, mirrors, vanities, refrigerators and tile. Meanwhile, K&B firms’ average pricing rose 2.8 percent YOY in Q2. Building and construction firms reported the largest price hikes of 4.0 percent YOY for the quarter. The average expectation for full-year 2024 price increases is now 3.9 percent, varying by K&B segment.
The “Missing Middle”
Most industry growth is happening at the extremes — low-end and large, high-end projects — as many homeowners stay on the sidelines for now. High-end projects are growing larger and more luxurious as wealth trends diverge among U.S. homeowners. The good news: all of these deferred mid-range renovations will prime the market for growth once economic conditions improve.
Consumer Uncertainty is Hampering Growth
K&B firms cited consumer uncertainty (44 percent) as the most significant barrier to realizing stronger growth, followed by the skilled labor shortage (32 percent) and higher material costs (26 percent). Weak existing home sales (22 percent) and high financing costs for renovations (22 percent) were also important factors.
“Consumer confidence is lagging behind evidence that the U.S. economy remains resilient, overall,” said Bill Darcy, Global President & CEO, NKBA | KBIS. “High consumer prices and elevated borrowing rates are preventing the majority of homeowners who have plans or aspirations to undertake K&B renovations from moving forward right now. In the meantime, K&B growth will largely be powered by high-end renovations at one extreme and DIY projects at the other.”
For additional data and insights, download the full Q2 2024 NKBA/John Burns Kitchen & Bath Market Index (KBMI) report here.
