Anticipated interest-rate cuts by the Federal Reserve, coupled with gradually declining mortgage rates, are expected to provide a boost to the nation’s new-construction and remodeling markets as 2024 heads into its final quarter, housing analysts say. Among the key statistics and forecasts released in recent weeks by government agencies, research firms and industry-related trade associations were the following:
Housing Starts & New-Home Sales
With inflation data pointing to pending interest-rate cuts from the Federal Reserve, and mortgage rates edging down, buyer interest and builder sentiment should improve in the months ahead, the chief economist for the National Association of Home Builders said last month. According to the Washington, DC-based NAHB, high interest rates for construction and development loans, as well as ongoing challenges regarding labor shortages and higher prices for many building materials, continued to slow the building market this summer, with overall housing starts, pegged at 1.24 million units through July, at their lowest pace since May 2020. However, with the Federal Reserve likely to cut interest rates, an improving interest-rate environment “will help buyers as well as builders and developers who are contending with tight lending conditions and high interest rates,” said NAHB Chief Economist Robert Dietz. With home inventory at a relatively low supply, builders are also prepared to increase production in the months ahead, Dietz said.
Kitchen & Bath Remodeling
Kitchen and bath spending is expected to decline 2% year over year in 2024, a slight uptick from the 3% decline predicted earlier this year, the National Kitchen & Bath Association reported. According to the NKBA’s mid-year market forecast, annual spending on kitchens and baths will total $175 billion this year, a projection that “indicates the market remains healthy by historical standards,” the NKBA said. According to the forecast, new-construction spending, impacted by a 6% dip in housing starts, is projected to decline 2%, to $108 billion this year. Repair and remodeling spending, impacted by 18 months of inflation-affected household savings, is expected to decline by 2%, to $67 billion, according to the forecast. “High borrowing rates limit home-equity access, and high-income homeowners are cautious, leading to major repair-and-remodeling projects being deferred or dividing into smaller tasks,” the NKBA said.
Major Home Appliance Shipments
Domestic shipments of major home appliances were off slightly through the first half of 2024 compared to the same six-month period in 2023, the Association of Home Appliance Manufacturers reported. According to the latest figures released by the Washington, DC-based AHAM, major home appliance shipments totaled 39.7 million units from January through June of this year, down 1.3% from the 40.3 million units shipped in the first six months of 2023. Declines through the first half of 2024 were posted for cooking appliances (-7.4%), kitchen cleanup (-4.5%), refrigeration (-2.4%) home laundry products (-1.0%), AHAM said.
Cabinet & Vanity Sales
Sales of kitchen cabinets and bathroom vanities, after reversing a lengthy pattern of declines in May, were down again in June, the Kitchen Cabinet Manufacturers Association reported. According to the KCMA’s latest monthly “Trend of Business Survey,” participating manufacturers reported that overall cabinet and vanity sales were down 2.2% in June compared to the same month in 2023. Custom cabinet sales fell 0.1% for the month, while semi-custom sales rose 1.1% and stock cabinet sales declined 15%. Year-to-date cabinet and vanity sales through June were down 4.0% compared to the same six-month period in 2023, the KCMA said.