While the industry slipped slightly in the 2nd quarter, the NKBA/John Burns Kitchen & Bath Market Index indicated overall growth, with regional pockets of strength around the U.S.
By Dianne M. Pogoda
The NKBA/John Burns Kitchen & Bath Market Index (KBMI), which provides a quarterly snapshot of the North American K&B industry’s current state and near-term expectations, revealed that the industry softened slightly in the 2nd quarter but is still poised for expansion in coming months.
The Index operates on a scale of 0 to 100, with scores below 50 signaling contraction and ratings above 50 projecting growth. While the Q2 rating dipped to 54 from 56 in the first quarter, its 50+ rating still indicates expansion ahead. In fact, the projection for near-term (next three months) kitchen and bath activity registered 63, a sign of optimism going forward.
Additionally, NKBA’s Kitchen & Bath Market Outlook Update, published in July, showed an improvement in the 2024 industry projection to $175 billion. This is up from $173 billion projected in the initial baseline forecast published in January. While still off by 2 percent year-over-year, the industry remains healthy with a smaller decline than first forecast.
Market Overview
Admittedly, the KBMI reflects that sales have been choppy, with consumer uncertainty cited by 44 percent of respondents as the top factor holding firms back from stronger growth, followed by the skilled labor shortage that has plagued the industry around the world for years. Consumers were skittish about the upcoming U.S. presidential election and its potential impact on the economy in Q2, although that was before the candidates changed in July. A different outlook might be reflected in the Q3 report.
The strength in the market was reflected at the higher and lower ends, with the middle ground virtually disappearing, and many consumers and industry pros alike adopting a budget-conscious mindset.
At the high end, wealthier clients remain resilient and are pursuing luxury projects. These are keeping the industry stable. At the lower end, consumers are more likely to undertake the most necessary do-it-yourself projects, or replace broken appliances and non-functioning elements rather than engage in full-scale remodeling. The middle market is at a standstill for the moment — but this indicates that opportunities should be available in the future, as these kitchens and baths are only getting older and will jumpstart the market once conditions improve.
In fact, some 1.7 million homes are entering their prime remodeling years, between 20 and 39 years old, between now and 2028. This bodes well for future business opportunities in the North American market.
Regional Outlook
Regionally, the U.S. demonstrates pockets of strength, with wealthier segments doing better in most markets. California firms repeated the theme of a bifurcated market, with low- and high-ends reflecting drastically different trends, and the greatest activity in the upper market. Southwest firms described more strength for new-construction K&B activity compared to remodeling projects. Consumer uncertainty dampened activity in the Northwest, with Idaho being a bright spot, while the lack of skilled labor in the Midwest continued to be a chronic concern. High-end remodeling in the Southeast, especially in Florida, remained strong. The Northeast also reflected resilience among wealthier clients.
Older consumers (baby boomers) across the nation are showing more interest in remodeling projects, as they can finally afford their dream kitchens and spa-like bathrooms and don’t want to wait.
Southern markets benefit from population migration in both new construction and remodeling.
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