Kitchen & Bath Market Index Inches Higher in Q1 Despite Persistent Headwinds

Written by Rob Stott

May 3, 2024

luxury kitchen home advisor nationwide marketing group independent retail

Professionals in the kitchen and bath industry have a rather rosy outlook for their channel even as certain challenges continue to create chaos around them, according to the Q1 2024 National Kitchen & Bath Association Kitchen & Bath Market Index. In Q1, the KBMI checked in at 56 out of 100, up 2 points from 54 in Q4 2023 and the highest rating over the past year.

NKBA points to a couple of different factors that influenced the increase, including high levels of wealth (particularly among Boomers), a growing number of aging-in-place renovations and a strong labor market. Many of the 508 NKBA members surveyed for the report said that they anticipate an increase in sales this year, typically in the mid-single digits range. Those expectations, they share, are tempered by the assumption that interest rates will remain high for a longer period of time than previously thought.

While Q1 results in the appliance industry have had major ripple effects globally through the manufacturing channel – see, Whirlpool, Bosch and Miele – retailers surveyed for the KBMI report that foot traffic increased during Q1 for the first time in nearly two years. According to the report, manufacturing orders have ticked up.

“It’s clear that elevated borrowing rates may be with us for longer than was expected, which is keeping many younger homeowners on the renovation sidelines for now,” Bill Darcy, Global President & CEO of NKBA | KBIS, said of the report’s findings. “However, we are seeing important signs of growth, nationally, and especially in certain regions of the country. Meanwhile, the continued strength of the high-end market is proving to be a powerful sustaining force as we collectively wait for rates to come down and renovation activity levels to increase in response.”

Here’s a quick recap of some of the other key findings from the report:

Growth driven by higher-end projects. High interest rates might be scaring the Millennial homeowner from moving or looking to invest in their current residence. But the KBMI showed that Boomer and Gen X clients are opening their wallets an investing in some major remodels. Demand for those larger, high-end projects have netted lots of activity in the plus-$100K range.

Regional trends in demand vary. Depending on which pocket of the country you’re looking in, consumers are either doing more than fine or not well at all, according to the KBMI. In the Southwest, NKBA members in the southwest corner of the U.S. say that demand is starting to grow among Millennial consumers for renovation projects, bucking a national trend among that demographic. Meanwhile, Boomers and Gen-X households are driving the majority of projects in the Northeast and Midwest. Elsewhere, the elevated interest rates are hampering demand in the West, particularly in California.

Respondents share familiar concerns. When it comes to the biggest challenges facing the kitchen and bath industry professional today, those surveyed shared similar and familiar concerns. The availability and cost of labor was at the top of the list and cited as the reason most firms struggle to keep up with demand. That was followed by inflation, interest rates and material costs.

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