By Bill Darcy

This year has been like none other for our industry, as strong growth across virtually every sector has led to record revenues. We have been fortunate, especially in light of the serious challenges other business segments have been forced to face due to COVID-19. To keep you as up to date as possible in an ever-changing environment, we have recently conducted and just released the second and final update to our Market Outlook report, which projects where kitchen and bath will be at year’s end.

Although our industry has thrived over the past year, it hasn’t been without its share of challenges, led by supply-chain disruptions, labor shortages and higher material costs. As a result, the robust projections from the July update to the Market Outlook have been pared back a bit, although the industry is still expected to register healthy double-digit gains over 2020. 

Below are some of the top takeaways contained in our October update.

• Solid Gains: Our final 2021 Market Outlook projects full-year revenues of $167 billion  — a 19% increase over the $141 billion in 2020. Still, it’s a modest downturn from the July update, which pegged year-end totals at $171 billion. 
• New Construction Leads: A healthy YOY gain of nearly 10% is expected within the K&B remodeling sector, but it’s the stunning 26% growth from new construction that is leading the way. 
• High-End Remains Strong: Premium projects will be up by over 22%, edging out the mid-range growth of 21%. Meanwhile, low-end project increases should be under 11%, suggesting a cooling of the DIY trend. The continued strength of premium projects is encouraging, but a note of caution is in order. The current projected growth has been scaled back from the over 28% in the July update. Some homeowners, faced with price increases related to supply-chain shortages, are deferring projects until they have enough saved to get exactly what they want, or in the hope that costs will come down. Either way, a delay today should lead to project work tomorrow. 
• Premium Product Upgrades are Increasing: A number of product segments have been experiencing higher-end upgrades. For example, 57% of smart-home upgrades have been premium, 54% of water-filtration systems, and 51% of appliances and countertops. Even standard kitchen features like flooring and lighting have seen an uptick in upgrades during remodels. 
• Housing Indicators Continue to Shine: Phenomenal YOY gains are expected across a range of indicators, including a 34% rise in existing home prices, 18% more new homes, and 37% more single-family permits. In fact, only one in three new home communities have any houses available for sale. 
• Single-Family Renter (SFR) Segment Boosts Remodels: Although the segment is not new, more and more institutional investors are entering this market as a way to enhance their financial returns. It’s expected that it will add $4 billion to top-line K&B revenues in 2021 and only go higher from there. Best of all, these investors have realized that their top ROI’s are from upgrades of kitchens and bathrooms, with nearly 3 in 4 doing so prior to renting to tenants. 

These findings are very encouraging and indicate that not only will we close out this year on a solid note, but the growth should be sustained into 2022. For the entire Market Outlook Update report, members can download at no charge here.