Key Takeaways

• Q1 sales of K&B products and design services posted a rating of 58.6 on a 100-point scale, a result of continuing cost pressures, lingering inflation and higher-than-usual mortgage rates. The current index is down slightly from the 61.4 reported last quarter and down significantly from the 77 reported at this time last year.  Demand has softened from early 2022 levels, however, kitchen and bath professionals were pleasantly surprised that Q1 2023 demand was stronger than expected.
• Despite a cooldown in demand, the industry remains on solid footing.  Kitchen and bath industry health modestly accelerated to 66.5 in Q1 2023, up from the previous quarter’s 62.5.
• Kitchen and bath professionals are cautiously optimistic about Q2 2023 sales.  At 68, expectations for next quarter sales reached its highest rating in 12 months. This is a significant acceleration from the 56.9 reported in Q4 2022, and the highest quarter-over-quarter gain in the past two years.  Some consumers are pausing large-scale projects until economic conditions stabilize, but others are moving forward with remodeling by shifting toward small, lower-cost projects.     
• Outlook for full-year 2023 K&B spending is brightening, at least for now.  Spurred by stronger than expected sales in Q1 and healthy backlogs, kitchen and bath professionals expect YOY growth of 7% in 2023.  K&B demand in 2023 is not expected to be widespread; instead it will be driven by spending among high income households in certain geographic markets.  High income households are generally more resilient in the face of higher prices.
• Economic uncertainty remains.  As the Federal Reserve continues to push rate hikes and inflation remains above historically normal levels, fear of recession remains K&B professionals’ top concern as they witness some consumers pausing remodels.
• 10-weeks is the longest you will wait for kitchen and bath products. Industry professionals say there is a slowing of demand and the capacity has normalized lead times so the longest average lead time is currently for appliances and not for materials.
• Despite slow project starts and increasing economic challenges. Most K&B professionals report an expected 7% increase, on average, in year-over-year sales projections for 2023.