Forging Forward

Despite concerns about a home improvement spending ‘cliff,’ the future holds positive promise for the remodeling industry, with many indicators pointing in the right direction.

The housing market in particular — fueled by low mortgage interest rates and consumers’ desires to move from congested urban areas to less densely populated suburbs and new construction — remains robust, an indication of strong activity ahead for the Kitchen and Bath businesses.

This optimism is borne out by our  fourth quarter report for 2020, released this month in conjunction with John Burns Real Estate Consulting. The KBMI has become a valuable quarterly research tool that captures a real-time snapshot of the industry’s current conditions, health and prospects going forward. I’m quite encouraged by the latest report, which shows that the index has strengthened for a third consecutive quarter, earning a rating of 65 (scores above 50 indicate expansion and scores below, contraction). This is an improvement from the third quarter of 2020, when the KBMI stood at 61.9, and certainly superior to the first two quarters of last year — as we were reeling from the initial stages of the pandemic — when the index was below 50.

While this report reveals the third quarter of improvement, significantly, it’s the second quarter of expansion and suggests we may have turned the corner. After plunging to 4.1 in Q1 2020, the index shows industry health has steadily climbed back to previous levels and is now at 7.1, just below the pre-pandemic peak of 7.2 in Q4 2019. Optimism for future projects is also nearing levels not seen since before the pandemic.

When the pandemic-induced lockdowns began, many homeowners started to tackle small home improvements and renovations. They had more time on their hands, often working and schooling from home. Some were fortunate enough to have extra disposable income, from not going out to eat, lower commuting costs and canceled vacations. Meanwhile, many were noticing a lot of things wrong with their living spaces but were reluctant to have strangers in their homes - thus a surge in DIY. Plus, the midst of the pandemic wasn’t the easiest time to undertake a large-scale job like a kitchen remodel.

Now, a year later, a lot of those smaller jobs have been completed and consumers are also beginning to accept that some lifestyle changes — especially working from home — are likely to remain to some degree after COVID-19 restrictions are lifted.

As consumers are anticipating or experiencing some return to normal, many are looking at larger and more involved projects that require the services of industry professionals to create spaces more conducive to their evolving needs. This is especially true for the kitchen, where we  increasingly spend so much of our time, and for the bath,  a sanctuary for wellness and relaxation.   

Our KBMI survey found that while supply-chain disruptions, cost of materials and the ongoing skilled-labor shortage are still key industry concerns, 58% of respondents said their project pipelines were larger in the fourth quarter of 2020 than the same time in 2019. And 58% of building and construction companies reported zero client postponements/ cancellations for the fourth quarter, a marked improvement over the previous two quarters.  Pandemic-fueled uncertainty is clearly showing signs of abating.

The bottom line is that the Kitchen and Bath industry is uniquely positioned to serve homeowners eager to remodel, and the robust housing market should continue to provide fertile ground for renovation as well as new construction. This bodes well for related industries and the economy as a whole, as we anticipate how a post-COVID 2021 might impact consumers and spending.   

For more on this survey and other exclusive NKBA research,  go to NKBA.org/research. All of our research is free for members, but our in-depth industry reports may also be purchased by non-members.