Retail Observer

RETAILOBSERVER.COM FEBRUARY 2024 30 T his year's kitchen and bath market will remain healthy by historical standards, according to NKBA's recently released 2024 Kitchen & Bath Market Outlook. Residential kitchen and bath spending is expected to decline by 3 percent to $173 billion in 2024, below the record highs reached in 2022 but above pre- pandemic levels. This annual report, with an update published mid- year, is a deep dive into market size and growth estimates, changes in consumer spending patterns, housing industry factors such as mortgage rates and more. The report was released in January and is free to NKBA members. The following are the top highlights. K&B INDUSTRY FORECASTS FOR 2024 The expected decline in the residential kitchen and bath industry spend will be seen nearly equally in both kitchen and bath segments, with each falling around 3 percent. Out of the total forecasted K&B spend of $173 billion, $84 billion will be spent on kitchens and $89 billion on baths. NEW CONSTRUCTION New construction is forecasted at $106 billion, an expected decline of 4 percent over the course of the year. This will be primarily driven by a 13 percent decrease in housing starts, with multifamily starts declining by 40 percent and single-family starts expected to be flat year-over-year. As a result, the single-family share of construction is anticipated to increase. To help with affordability, higher shares of homes completed will be entry-level, spec homes, and smaller in size. Good news for kitchen pros is that kitchens are expected to be larger. And overall, factors such as an increase in single-family share of construction, labor and material inflation, and larger kitchens have led expected declines in new construction spend to be lower than they would otherwise be. REPAIR AND REMODEL As for repair and remodel (R&R) spend, the 2024 forecast is $67 billion, a decline of 2 percent in 2024. High inflation over the last 18 months has eroded excess household savings, one of the primary drivers of R&R spend during the pandemic, so consumers are investing less in these projects. Additionally, higher mortgage rates make it difficult for homeowners to tap into home equity, diminishing another significant source of R&R funding — especially for large projects. Even high-income tier households, which are less rate- sensitive and drove demand for large R&R projects in 2023, have lowered their view of personal finances. Given the lack of funding options for large R&R projects and uncertainty about the economy, many households are deferring large projects or breaking them up into smaller phases. A S S O C I AT I O N [ N E W S ] WHAT TO EXPECT FOR K&B IN 2024 While industry spend is expected to decrease by 3 percent this year, NKBA research forecasts that it will be higher than pre-pandemic levels Design: Lance Stratton; Co-Designers: Tom King & Kate LeCount | Photo: Martin Mann Design: Jaque Bethke | Photo: Edward Zakarian

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