Older, More Affluent Homeowners Lead the Way
One of the clear takeaways from the Q1 2024 NKBA/John Burns Kitchen & Bath Market Index (KBMI) report is that the market for high-end K&B projects remains resilient and mostly immune to higher prices and stubbornly inflated borrowing rates. It’s also evident that many of the high-income homeowners moving forward with these renovations are older Gen X and Boomer consumers, who remain a focus of industry professionals. Meanwhile, middle-income consumer demand has become weaker.
Overall the KBMI results are looking increasingly optimistic, driven in large part by big-ticket renovation projects. Lead quality improved in Q1 2024 for high-end/luxury projects, signaling profit potential for firms concentrating on projects with budgets of $150k or more.
On the other end of the spectrum, industry pros say that more modestly priced homes are underperforming. Younger households are struggling with affordability concerns, which is hampering overall growth. The one outlier: millennials in the Southwestern U.S., a nascent area of growth, according to surveyed remodelers.
As a result of these trends, many of the surveyed firms said they are increasingly catering to clients with high disposable income and the ability to start projects now. Design professionals, for example, view resilient high-end consumers as a continued growth area for their industry, and lead quality for high-ticket jobs has increased. In the building and construction sector, project scopes have increased, a likely indicator of a narrower pool of wealthier homeowners pursuing sizable projects.
While industry pros report that most U.S. consumers are still experiencing sticker shock at higher K&B prices — general pricing for building products, for example, is up 40% since pre-Covid — their Gen X and Boomer clients are still proceeding with remodels to address family and lifestyle needs, such as retirement and aging-in-place. Lead quality continued to increase at the high end, and projects priced over $100K yielded increasing profit potential in the first quarter.
These findings align with insights from a recent NKBA-commissioned report conducted by Zonda on luxury K&B consumers. The report said that “remodeling spending among high-income households will stabilize and outperform the broader market, while remodeling spending from middle-income households is contracting.” It predicts that while DIY spending will soften in the first half of the year, pro remodeling market should continue to build in the second half of the year and beyond, largely thanks to high-end projects. Wealthier homeowners are feeling more positive about investing in major home purchases as compared to their middle-income counterparts, reversing a recent trend.
“High-income homeowners are clearly the difference-makers in keeping the K&B industry stable and trending upward as we await an expected period of more significant growth later in the year and into 2025,” said Bill Darcy, Global President & CEO of NKBA | KBIS. “As middle-income households take a beat and wait for interest rates to moderate, luxury K&B consumers’ projects are sustaining demand for professional remodeling.”
To read more insights about key, early trends in the K&B market this year, download the full Q1 2024 NKBA/John Burns Kitchen & Bath Market Index (KBMI) report here.
