Kitchen and bath spending is expected to jump 16% this year — even with inflation and mortgage rate increases — and reach $189 billion, reported the National Kitchen & Bath Association in its midyear market outlook report.
NKBA’s July 2022 Residential Kitchen and Bath Market Outlook prediction is $10 billion lower than the initial 2022 forecast, it added, but the market is still robust.
“This new Market Outlook report provides revised market size estimates and 2022 forecasts in the kitchen and bath industry, as well as gauges the economic and housing market shifts that continue to impact our market,” said Bill Darcy, CEO of the NKBA. “Despite some economic headwinds, kitchen and bath remodeling demand remains strong.”
Other report findings:
- The report also found that new construction is projected to represent over 60 percent of industry revenues, driven by a record number of new home builds. The report forecasts 21 percent YOY new construction growth, unchanged from the initial report in January, it added.
- Higher-end activity was revised upward due to rapid home appreciation and client movement on deferred projects, while mid-range projects are projected to see upwards of 20% gains, the biggest YOY increases based on growth in new construction. However, lower-end work projection has been sharply scaled back due to higher inflation causing many to put their projects on hold, it found.
- Nearly three in four homeowners are locked into mortgage rates below 4%, making it more cost-effective to remodel than to move. This, along with record-high homeowner equity per household and a high number of homes in prime remodeling years, bodes well for the second half of 2022, the NKBA said.
- While builders are working through the substantial backlog of homes in various stages of completion, the number of new housing starts is falling due to high mortgage rates and home prices, it said. This combination has led to a shrinking gap between home starts and completions.
- There are recession concerns. The Fed has tried to control inflation with three interest rate hikes this year, the latest in June, the report said, adding that the last three times the Fed initiated a cycle of rate hikes, a recession ensued within a year. “We anticipate moderate declines in kitchen and bath spending in the event of a recession next year,” said Darcy. “Our view is informed by improved housing and consumer fundamentals and a likely less severe recession, relative to recent history if one were to occur.”
Andrea is passionate about home design, and has covered the home furnishings industry for most of her journalism career. She is the Executive Editor, Design, of Designers Today; in addition, she also serves as the Managing Editor of HFN and Lighting Editor for Home Accents Today. Andrea lives in beautiful Brooklyn, where she could very well be the only person without a tattoo.