As we navigate 2024, the Kitchen & Bath (K&B) sector is experiencing a period of cautious stability. While many homeowners are eager to upgrade their spaces, they’re currently in a “wait and see” mode, anticipating more favorable economic conditions. This hesitation stems from high borrowing rates and rising consumer prices, which have led many to pause their renovation plans. For kitchen and bath specifiers, understanding these trends is crucial for planning future projects and guiding clients effectively.
Current Market Insights
The National Kitchen & Bath Association’s (NKBA) 2024 Market Outlook Update provides valuable insights into these trends. Despite a slight projected decline in spending, the K&B sector remains robust, with a forecasted total spend of around $175 billion for this year. Here’s a closer look at some of the key insights from the report:
1. Shifts in New Construction:
- New construction spending is expected to drop by 2% to $108 billion. This is partly due to a 6% decline in new housing starts (The term housing starts refers to the start of construction on a new residential housing unit), as more builders focus on smaller, entry-level homes. These homes often feature simpler, value-engineered kitchens and baths. While this might seem like a downturn, the increasing share of single-family home construction and ongoing material and labor inflation may balance the overall spending levels.
2. Renovations on Hold:
- Many homeowners are deferring large renovation projects. Spending on repairs and remodeling is expected to decrease by 2% to $67 billion. High borrowing costs and inflation have made tapping into home equity more challenging, causing many to postpone major updates. High-income homeowners, who fueled renovation demand last year, are also adopting a cautious approach, often breaking larger projects into smaller phases.
3. Rise in DIY and Budget-Friendly Projects:
- As homeowners wait for better economic conditions, they’re turning to smaller, DIY projects. These low-cost renovations are expected to increase by 10%, while DIY spending will grow by 2%. Meanwhile, more expensive mid-tier and high-tier projects are seeing declines of 5% and 8%, respectively. This shift highlights the current preference for cost-effective solutions that still allow homeowners to make incremental improvements.
Looking Ahead
Despite these current trends, the long-term outlook for the K&B sector is promising. Over 1.7 million homes are set to enter their prime remodeling years in the next four years. As the economy improves, many homeowners will likely move forward with projects they’ve been putting off. Recent homebuyers, particularly those who purchased entry-level homes, are expected to seek upgrades as they settle in. Additionally, homeowners are holding substantial home equity, ready to be leveraged once interest rates become more favorable.
Two indicators signal growing consumer interest: increased inquiries about K&B projects and a rise in leads for high-end renovations. As economic conditions improve, these indicators suggest a significant uptick in renovation activity.
Preparing for the Future
For specifiers in the kitchen and bath industry, these insights offer a roadmap for navigating the current market. By understanding the cautious yet optimistic landscape, specifiers can better advise clients, offering solutions that align with both current budget constraints and future aspirations.
To end, while the present may seem uncertain, the K&B sector is poised for growth. As the economy stabilizes, expect a resurgence in demand for innovative kitchen appliances and bathroom fixtures that enhance both functionality and style.
For detailed insights and data, consider accessing the full NKBA Market Outlook Update to stay ahead in this evolving industry
Shaun Ayala
Kitchen & Bath Marketer – Pacific Sales / Best Buy