The nation’s housing and residential-remodeling sectors continue to exhibit mixed results in the face of inflation and other market headwinds. Among the key statistics and forecasts released in recent weeks by government agencies, research firms and industry-related trade associations were:
HOUSING STARTS & NEW-HOME SALES
Housing analysts expect “choppiness” for single-family construction in the months ahead, with 2023 data posting significant year-over-year weakness before improving on a sustained basis, according to the chief economist for the National Association of Home Builders. Single-family housing construction has exhibited signs of a gradual upturn in recent months, as stabilizing mortgage rates and limited existing inventory are helping to offset high construction costs, building labor shortages and tightening credit conditions, said Robert Dietz of the Washington, DC-based NAHB. “With builder sentiment climbing for four consecutive months and single-family starts continuing to move gradually higher, this indicates that a turning point for single-family construction will occur later this year,” said NAHB chairman Alicia Huey.
EXISTING-HOME SALES
Existing-home sales “are trying to recover, (but) are highly sensitive to changes in mortgage rates,” the chief economist for the National Association of Realtors said last month. According to Lawrence Yun of the Washington, DC-based NAR, “it’s a unique housing market,” in which additional supply is needed to fully satisfy demand. Existing-home sales are running at a seasonally adjusted annual rate of some 4.5 million units, down more than 20% from the same time a year ago. “With overall consumer price inflation calming and rents expected to decelerate from robust apartment construction, the Federal Reserve’s monetary policy will shift from tightening, to neutral, to possibly loosening, over the next 12 months,” Yun said, predicting that home sales “will rebound despite several months of fluctuations.”
CABINET & VANITY SALES
Sales of kitchen cabinets and bathroom vanities posted continued gains in April, although the pace of monthly growth is seemingly slowing as both the housing and remodeling markets continue to cool, the Kitchen Cabinet Manufacturers Association reported. According to the KCMA’s latest monthly “Trend of Business Survey,” participating manufacturers reported that overall cabinet and vanity sales were up 8.6% in April compared to the same month last year, down from the double-digit monthly increases reported throughout 2022.
Gains in April were led by a 20.4% increase in sales of semi-custom cabinets, while custom cabinet sales rose 2.5%. In contrast, sales of stock units posted a 17.5% decline, according to the Reston, VA-based KCMA. Despite continued declines in stock cabinet sales, year-to-date sales in 2023 were up 7.6% compared to the same four-month period in 2022, the trade association added.
U.S. Remodel Market Forecast to Contract by 2024
CAMBRIDGE, MA — After more than a decade of continuous growth, annual spending on improvements and repairs to owner-occupied homes is expected to decline by early next year, according to the Leading Indicator of Remodeling Activity (LIRA), released recently by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University (see related story above).
The latest LIRA projects that year-over-year expenditures for homeowner improvements and maintenance will post a modest decline of 2.8% through the first quarter of 2024, according to the Cambridge, MA-based Joint Center.
“Higher interest rates and sharp downturns in homebuilding and existing home sales are driving our projections for sluggish remodeling activity next year,” said Carlos Martín, project director of Harvard’s Remodeling Futures Program. “With ongoing uncertainty in financial markets and the threat of a recession, homeowners are increasingly likely to pare back or delay projects beyond necessary replacements and repairs.”
According to Harvard analysts, homeowner improvement and maintenance spending is expected to top out at $458 billion in the coming year, compared with spending of $471 billion over the past four quarters. However, steady growth in the number of homes permitted for remodeling projects, as well as a slew of federal incentives for energy-efficiency retrofits, may buoy remodeling expenditure from steeper declines, the Joint Center said.