NKBA’s final Kitchen & Bath Market Outlook update of the year calls for strong across-the-board growth.
By Robert Isler
NKBA’s Kitchen & Bath Market Outlook October update revealed a full-year revenue projection of $167 billion for 2021 — a healthy year, and consistent with robust expectations resulting from the surge in remodeling brought on since mid-2020. While much of it solidly confirms prior reports, there are a few, less obvious surprises hidden in the research.
The latest projection represents a vigorous 19% increase over the $141 billion logged in 2020. The white-hot pace, though, will not go on indefinitely, and there are already clear signs that growth is beginning to moderate, settling into a steady, sustainable rate. In fact, in the July update, the full-year revenue forecast was for $171 billion. Although the latest expectation is a modest revision of a great number, directionally, it is still down.
Kitchen and bath growth has absolutely popped for new construction. Just under $100 billion of the projected $167 billion is expected to be earmarked for this sector, a whopping 26% gain over 2020. K&B remodeling should show full-year growth of just below 10% — still a healthy gain. Both, though, are a few percentage points off the previous forecast.
Kitchen and bath growth has absolutely popped for new construction with just under $100 billion of the projected $167 billion expected to be earmarked for this sector, a whopping 26% gain over 2020.
Drilling down, the greatest growth by project size is clearly in the high-end and mid-tier segments. Full-year revenues for premium projects are expected to run more than 22% ahead of last year, with mid-level projects exceeding 21%. Lower-end remodels lag, with expected gains below 11%. These are, of course, healthy increases, but there are a few things brewing behind the scenes.
For one, the much slower pace of growth for low-end projects strongly suggests that the red-hot DIY trend during the height of the pandemic — based on both economic concerns and the fear of letting strangers in the home — is cooling off. This indicates that homeowners are opting for fuller, more expansive remodels, which is welcome news for K&B pros. On the other end of the spectrum, although high-end remodels are still enjoying the greatest growth, the 22% projected gain for the year is a noticeable downward revision from the 28% expected just three months earlier. Two factors appear to be in play. First, the ongoing supply-chain issues that have plagued the industry and led to substantially higher pricing are resulting in client pushback. Some homeowners are putting projects on hold, hoping for a return to normalcy, while others are delaying so they could save up more, reasoning that if they are going to be paying top dollar on the project anyway, they might as well get everything they want.
The report delves into a series of housing industry developments — some unprecedented — that have correlated with the growth seen in the past year. It also details the kitchen features that are more likely to receive a premium upgrade. Both topics will be covered in upcoming KBMO stories.
Finally, the report takes a deep dive into the Single-Family-Renter (SFR) market, a relatively new housing industry development that has caught the attention of small players as well as sophisticated institutional investors. While still evolving, “built for rent” housing has already added approximately $4 billion to top-line K&B revenues and has the potential to strongly impact the industry going forward. More on this in the coming months.