Kitchen & Bath Business - January 2019 - 24

Industry Outlook

Carefully Confident

Although several factors may cause ambiguity
for 2019, the general attitude is upbeat

W

ITH THE CONTINUED

in the remodeling and new
construction markets,
the industry is still
cautiously optimistic
about what's to come
in 2019. According
to the National Kitchen & Bath Association
(NKBA) 2018-19 Kitchen and Bath Market
Outlook Report, at press time there was an 11.5
percent increase in money spent on new housing
in 2018, and a 9.5 percent increase is estimated for
2019. For residential remodeling spending, there
was an estimated 7.3 percent increase in 2018 and
a 6.8 percent increase for 2019.
"Our industry has not benefitted as much as in
the past when new housing would bounce back as
soon as the recovery started,"said Manuel Gutierrez, the NKBA's consulting economist."Remodeling has done better partly because of that reason;
homeowners need to maintain their property on
an ongoing basis."If appliances fail or a kitchen or
bath needs repair, for instance, they might just [act
on that] during a recession. But during a recovery,
they will more likely spend more than for just a
straight replace or repair."
 
GROWTH

24

ED BRADY

President and CEO
of the Home Builders
Institute (HBI)

BILL DARCY

CEO of the National Kitchen
& Bath Association (NKBA)

THE ELEPHANT IN THE HOME:
THE SKILLED LABOR SHORTAGE

PROS AND CONS

Since a majority of the population plans to stay in
their homes longer, they are also investing more
on remodeling and will continue to do so as long
as the economy is in an upswing. Potential inhibitors include rising home interest rates, the
price increase for certain materials and the tariffs,
which could potentially have a negative impact on
consumers depending on how our industry plans
to take the hit.

"There is a political influence on our industry
in relationship to the tariffs," said Randy Fiser,
Hon. FASID, CEO of the American Society of
Interior Designers (ASID)."How long will those
last? Will it become a trade war, or will it end soon?
With all of that being said, we may not be looking
at the near double-digit growth we have seen in
the recent past."
Interest rates are slowly rising, which has lessened some of the demand to purchase homes,
but the overall outlook is that our economy is still
strong, and more millennials are starting to buy.
According to the National Association of Home
Builders (NAHB), the average rate on 30-year
mortgages for new homes increased to 4.64 percent last September, up from approximately 4
percent over the previous 12 months.
"Housing affordability is at a 10-year low; labor
and material costs are going up, which is why interest rates are increasing,"said Robert Dietz, SVP
& chief economist for the NAHB. "On the flip
side, homeowners do have more wealth, which is a
positive for housing demand, and unemployment
is lower than it has been in 50 years."
According to David Pekel, national president
and interim CEO of the National Association of
the Remodeling Industry (NARI), while wages
increase, worker productivity continues to decline. He says one of the leading indicators has
to do with the aging of the workforce in construction and the lack of entry-level candidates
coming in.

BY CHELSIE BUTLER

Although the housing market is slowing down,
the demand for workers continues to grow. According to Dietz, as of September 2018, there were
just less than 300,000 open positions. The retirement of baby boomers and millennials' perceived
notion that the skilled trade industry is not viable
have a huge impact on cost and production cycles.
The NKBA's recent Workforce Development
Study found that the labor shortages have the biggest impact on start and finish dates for projects,
with members citing that about 30 percent of jobs
are experiencing a delay.The study also found that
as far as the skilled trades, the biggest shortage is
with installers and carpenters.
"The labor shortage is across the board - it is
the number-one challenge in our industry," said
Bill Darcy, NKBA CEO. "We are not an entity
that can solve this on our own, everyone needs to
do their part."

Kitchen & Bath Business / JANUARY 2019 / KBBONLINE.COM / The official publication of KBIS (KBIS.com)

ROBERT DIETZ

Senior Vice President &
Chief Economist of the
National Association of
Home Builders (NAHB)
http://www.KBBONLINE.COM http://www.KBIS.com
Kitchen & Bath Business - January 2019

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