NKBA/John Burns Kitchen & Bath Market Index (KBMI) – Q2 2023

NKBA/John Burns Kitchen & Bath Market Index (KBMI) – Q2 2023

The NKBA/John Burns Kitchen & Bath Market Index (KBMI) is a quarterly gauge of current and future market conditions within the kitchen and bath industry. A total of 581 industry professionals participated in the study from the four primary industry segments – Design, Building & Construction, Manufacturing, and Retail. The report outlines key indicators used to identify trends, strengths, and weaknesses within the industry.

Key Takeaways

• Kitchen and bath professionals are exhibiting cautious optimism regarding sales in the second half of 2023. Expectations for next quarter’s sales are notably higher, with a rating of 65.5 compared to the year-over-year rating of 62 in Q2 2022. While some consumers are postponing large-scale projects until economic conditions stabilize, others are proceeding with remodeling by choosing smaller, more affordable projects.
• The rating for Q2 sales of K&B products and design services was 48.6 out of 100, mainly influenced by economic uncertainty, ongoing cost pressures, persistent inflation, and elevated mortgage rates. This index is slightly lower than the 58.6 reported in the previous quarter and significantly lower than the 73 reported a year ago.
• During Q2 2023, kitchen and bath activity experienced a notable slowdown, particularly in the retail and manufacturing sectors. The industry saw flat sales revenue, decreased foot traffic, and a decline in manufacturers’ orders, all indicating reduced activity. This deceleration is attributed to higher prices and interest rates. For some firms, slower growth has been a welcome normalization following the surge in demand during the COVID period. For others, it requires adjusting expectations as the market returns to more typical levels.
• Although there has been a slight decrease in demand, the kitchen and bath industry still maintains a strong position. Industry health modestly declined to 65.2 in Q2 2023, slightly down from 66.7 in the previous quarter.
• Economic uncertainty continues to loom over the industry. The Federal Reserve’s ongoing rate hikes and inflation levels above historical norms have increased concerns about a potential recession. As a result, some consumers are pausing remodel plans, contributing to cautious sentiment across the sector.
• Design firms in the kitchen and bath industry are experiencing a reduced average backlog of 2.6 months. Professionals attribute this to slower demand and normalized capacity, resulting in shorter lead times and a significant reduction in design backlogs.

Additional Topics Covered

• Expectations and outlook of the kitchen and bath industry by segment
• Top challenges and concerns industry professionals are currently facing by segment
• Differences in current project demand in 2023
• Average year-over-year increases in material costs and how professionals are addressing them