The kitchen and bath industry grew at a slower-than-expected pace amid a "clear shift" in expectations through the balance of 2019, according to the Q2 2019 Kitchen & Bath Market Index (KBMI). The KBMI noted industry expansion continued while conditions were notably weaker than the previous two quarters, with industry members reporting rising costs and a shift in demand to lower-priced products, according to Kitchen & Bath Design News.

The KBMI also found that surveyed National Kitchen & Bath Association members were more positive about future conditions than current conditions, with growth expectations moderating due to declining per-sale revenue coupled with rising material and labor costs. Survey respondents now expect 4.7% sales growth in 2019, down from the 5.4% growth rate reported last quarter, the index revealed. Of the four sectors surveyed, manufacturers are the most bullish.

The KBMI also found that a “big shift is underway,” with rising material and labor costs driving a move to smaller projects and more affordable finishes. The KBMI also found that the industry remains challenged by the availability of skilled labor, the rising cost of materials and trade (tariff) issues. Specifically:

  • Designers report that higher project costs and declining confidence are causing consumers to shift to lower-priced kitchen/bath products and finishes.
  • Building/construction companies report that the lack of skilled subcontractors is preventing them from doing more projects. Remodeling companies say they are investing in project management software to create efficiencies as the availability of trades worsens.
  • Retail/sales companies say that flattening real estate values, economic uncertainty and higher product costs are negatively impacting clients’ urgency and budgets.

The KBMI is a quarterly gauge of market conditions based on a survey of more than 450 participants across design, building and construction, retail sales, and manufacturing industry segments. The survey, conducted jointly by the NKBA and John Burns Real Estate Consulting, examines current demand, future expectations, and challenges that industry professionals are facing.

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