HOUSING STARTS & NEW-HOME SALES

Single-family permits and construction starts continued to be down on a year-to-date basis, as the housing market remained impacted by elevated mortgage rates, challenging affordability conditions and macroeconomic uncertainty, according to the National Association of Home Builders, which is forecasting that 2025 will end with a decline in single-family housing starts. New-home sales year to date are about 3% lower in 2025, said the Washington, DC-based NAHB. “As a result of slowing home sales, inventory continues to rise,” said NAHB Chief Economist Robert Dietz, adding that builders will be “pulling back” on construction in the months ahead due to current levels of inventory.

Market Analysis: JCHS Report Cites ‘Uncertainty’ in U.S. Housing Market

CAMBRIDGE, MA — The nation’s housing market is “shrouded in uncertainty,” with elevated home prices and interest rates pushing sales to their lowest level in 30 years amid little indication that record-high levels of unaffordability will ease anytime soon, housing analysts said in June. KEEP READING

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HOUSING STARTS & NEW-HOME SALES

Builder confidence fell sharply in May amid growing uncertainties stemming from elevated interest rates, tariff concerns and a cloudy economic outlook – although positive news on the tariff front “should provide a boost to housing demand,” the National Association of Home Builders said. “The spring homebuying season has gotten off to a slow start as persistent elevated interest rates, policy uncertainty and building material cost factors hurt builder sentiment,” said Buddy Hughes, chairman of the Washington, DC-based NAHB. “However, builders expect that future trade negotiations and progress on tax policy will help strengthen housing demand.” Policy uncertainty stemming in large part from tariff issues has blunted builder confidence, said NAHB Chief Economist Robert Dietz, adding that, as of May, a majority of home builders were using incentives to facilitate sales due to lackluster demand.

EXISTING-HOME SALES

Sales of existing homes have been at 75% of normal, pre-pandemic activity for the past three years, even with seven million jobs added to the economy, according to the chief economist for the National Association of Realtors, who noted that pent-up housing demand “continues to grow, though it’s not being realized.” Any meaningful decline in mortgage rates “will help release this demand,” said Lawrence Yun of the Washington, DC-based NAR. “At this stage of the housing market, it’s all about mortgage rates,” Yun noted. “Lower mortgage rates are essential to bring home buyers back into the market.”

RESIDENTIAL REMODELING

The nation’s aging housing stock combined with insufficient new-home inventory points to future growth for the remodeling market, according to a report from the National Association of Home Builders. Recent data, said the NAHB, indicates that nearly half of U.S. owner-occupied homes were built before 1980 and have climbed to a median age of 41 years. Despite current economic uncertainty, the NAHB is forecasting residential remodeling activity to post a 5% gain in 2025, followed by a 3% increase in 2026.

CABINET & VANITY SALES

Sales of kitchen cabinets and bathroom vanities declined in April compared to the same month in 2024, 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 in April were down 9.3% from the same month a year earlier. Declines were reported for stock cabinets (-20.8%), as well as for semi-custom (-3.9%) and custom units (-11.8%), the KCMA reported. Year-to-date sales through April were down 6% compared to the same four-month period a year earlier.

MAJOR HOME APPLIANCE SHIPMENTS

U.S. shipments of major home appliances rose in the first quarter compared to the same three-month period in 2024, the Association of Home Appliance Manufacturers reported. According to AHAM’s latest figures, appliance shipments from January through March totaled 20.2 million units, up 2.6% from the 19.7 million units shipped in the first quarter last year. Gains were led by an increase in shipments of cooking (+9.6%) and home laundry (+3.3%) products. In contrast, shipments of refrigeration (-3.4%) and kitchen-cleanup products (-1.5%) were down from the same period last year.

Market Analysis: Uncertainty Mounting Among Homeowners, Survey Finds

INDIANAPOLIS, IN — In a shifting economic landscape, U.S. homeowners are increasingly feeling the financial pinch, reassessing their remodeling priorities and finding new ways to get the most from their current homes, according to a report by home-services website Angi, Inc. KEEP READING

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A five-point decline in the NAHB’s latest Remodeling Market Index (RMI) “likely reflects consumer uncertainty, fueled by rising costs and tariff concerns,” said NAHB Chief Economist Robert Dietz (see related graph above).

“Although almost all the data for the first quarter RMI were collected before the release of specific reciprocal tariffs, the debate and uncertainty over tariffs has had an effect on consumer confidence,” Dietz observed.

Remodelers responding to the latest RMI survey reported that their suppliers have already increased prices by an average of 6.9% since January due to the anticipated effect of tariffs, the Washington, DC-based NAHB reported.

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Housing Starts & New Home Sales

The recent decline in housing starts “is a clear signal” that affordability pressures due to elevated interest rates, rising construction costs and labor shortages are intensifying, housing analysts said last month. “Elevated mortgage rates and rising construction costs are making it increasingly difficult to deliver homes at price points accessible to entry-level buyers,” said Buddy Hughes, chairman of the National Association of Home Builders. “Without policy support, addressing the affordability crisis remains an uphill battle.” When asked about the impact of tariffs on their business, 60% of builders reported in April that their suppliers have already increased or announced increases of material prices. On average, suppliers have increased their prices by 6.3% in response to announced, enacted or expected tariffs, according to the NAHB. Builders estimate a typical cost effect from recent tariff actions at $10,900 per home, the trade association added.

Existing-Home Sales

Existing-home sales remain sluggish due to affordability challenges tied to elevated high mortgage rates, the chief economist for the National Association of Realtors reported last month. According to Lawrence Yun of the Washington, DC-based NAR, current market conditions signal “the troublesome possibility of less economic mobility for society.” According to the latest NAR forecast, mortgage rates will average 6.4% in 2025, declining slightly to 6.1% in 2026. The trade association said it expects existing-home sales to rise 6% this year, and accelerate another 11% in 2026. “Home-price growth will moderate due to more supply coming onto the market,” Yun predicted. “A meaningful decline in mortgage rates would help both demand and supply – demand by boosting affordability, and supply by lessening the power of the mortgage rate lock-in effect,” he added. “We expect mortgage rates to slide moderately lower, but the high national debt will prevent rates from falling drastically.”

Residential Remodeling

Annual expenditures for improvements and maintenance to owner-occupied homes are expected to grow modestly through 2026, according to the Leading Indicator of Remodeling Activity, released in April by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. The LIRA projects that year-over-year spending for home renovation and repair will increase 2.5% this year, reaching a record $526 billion by the first quarter of 2026. “Recent increases in the sales of existing homes are expected to drive slow but steady growth in home remodeling and repair,” said Carlos Martín, director of the Remodeling Futures Program at the Cambridge, MA-based Joint Center. “High home values and other strong economic indicators have supported an uptick in homeowner improvement spending. However, economic volatility due to the uncertainty surrounding tariffs and falling consumer confidence could well dampen expected growth.”

Cabinet & Vanity Sales

Sales of kitchen cabinets and bathroom vanities declined in March compared to the same month in 2024, 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 in March were down 4.0% from the same month a year earlier. Sales declines were reported for stock cabinets (-20.9%), as well as for semi-
custom (-0.5%) and custom units (-0.5%), the KCMA reported. Year-to-date sales through March were down 4.9% compared to the same three-month period a year earlier, the Reston, VA-based KCMA added.

Market Analysis | Report Reflects Consumer Uncertainty, Fueled by Rising Costs

WASHINGTON, DC — Rising homeowner equity and limited opportunities to move into other homes continues to bolster the home-improvement market and keep remodelers’ sentiments positive, although sentiment “is not quite as positive” as it was the previous quarter, “as some remodelers are reporting that uncertainty about tariffs and the direction of the economy are making customers hesitant to spend on larger projects,” according to a new report from the National Association of Homebuilders. KEEP READING

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Housing Starts & New Home Sales

High construction costs, elevated mortgage rates and challenging housing affordability conditions are causing home builders “to approach the market with caution,” the National Association of Home Builders said last month. “The single-family home-building market is facing competing concerns and opportunities,” commented Robert Dietz, chief economist for the Washington, DC-based NAHB. “Given persistent affordability concerns, reducing inefficient regulatory costs would offer the best policy path to improve attainable housing supply and bring down shelter inflation.” Constrained housing affordability conditions due largely to ongoing, elevated interest rates have led to a recent reduction in single-family production, the NAHB reported. “Upside and downside risks will become clearer as the new year progresses,” Dietz predicted. “An easing regulatory environment and tax cuts could act as tailwinds, but tariffs and potentially higher deficits could dampen market momentum.” 

Existing-Home Sales

Elevated home prices and high mortgage rates continue to strain affordability and impact the sales of existing homes, the National Association of Realtors reported. Housing affordability “suffered” according to the latest available statistics, as mortgage rates remained in the 7% range, the Washington, DC-based NAR said. Compared to a year ago, the monthly mortgage payment on a $300,000 home increased to $1,590, the Washington, DC-based trade organization said. At the same time, pending home sales pulled back, while year-over-year contract signings lowered in all four U.S. regions, the NAR reported. “It’s unclear if the coldest January in 25 years contributed to fewer buyers, and if so, expect greater sales activity in upcoming months,” the trade association added.

Residential Remodeling

Home professionals are approaching 2025 “with renewed confidence” after a year marked by revenue and profitability declines, according to a forecast by Houzz Inc., the Palo Alto, CA-based online platform for home remodeling and design. Houzz’s annual forecast, released in February, noted that more than 3 in 5 firms in the nation’s residential construction and design sectors are projecting a positive business outlook this year. In 2024, businesses across all key industry groups reported the biggest year-over-year decline in average annual revenue growth since 2014, said Houzz, which attributed missed revenue targets to declines in both the number and the size of projects. Labor shortages will continue to be a “persistent challenge,” while expectations for rising labor costs are also widespread, Houzz noted. While the availability of products and materials is expected to remain largely unchanged, more companies surveyed anticipate costs to rise in 2025 than those that expect costs to decline, Houzz added.

Harvard Report: U.S. Remodeling Still Above Pre-COVID Levels

Spending in the U.S. residential remodeling market reached unprecedented heights in the wake of the COVID-19 pandemic, soaring above $600 billion for the first time in 2022. And despite modest declines the past two years, market expenditures for improvements and repairs to owner-occupied and rental properties is expected to remain “far above” pre-pandemic levels in 2025. KEEP READING

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Those are among the key conclusions ofImproving America’s Housing, a comprehensive annual report released by the Joint Center for Housing Studies of Harvard University. 

The Cambridge, MA-based Joint Center noted that the “extraordinary strength” of the market has been supported by aging homes and households, as well as by record-high property values and a healthy job market. The pandemic also sparked a spending boom in improvements, as well as in routine maintenance and repairs.

Since peaking at $611 billion in 2022, the remodeling market has contracted slightly in the face of mixed economic and industrial conditions. Yet spending is ultimately expected to remain near its peak through 2025, posting about $608 billion this year, according to the Joint Center (see related graph, above).

“Many owners continue to adapt their properties for changing needs and uses, even as today’s lower rates of personal savings and household mobility dampen improvement and repair spending,” the Joint Center’s report stated. “Nonetheless, industry fragmentation, inflation and a shortage of skilled trade labor jeopardize the ability of the industry to meet demand.

“Overcoming these obstacles will be critical for modernizing and preserving the existing housing stock, including addressing adequacy and accessibility needs,” the report added.

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That’s the key finding of a nationwide survey of kitchen/bath dealers and design firms conducted by Kitchen & Bath Design News in conjunction with KBDN’s exclusive research partner, Bryan Research.

Surveyed business owners told KBDN that they are spending, on average, 8.4% of their annual operating budget on technology, although about one in three report they expect that percentage to increase in 2025. Interestingly, nearly 4% report that they spend more than 30% of their annual operating budget on technological advancements, a reflection of both technological advances and increasingly tech-savvy clients.

According to the survey’s findings, the vast majority of respondents (93.4%) report that they currently utilize some form of technology to communicate with clients and prospects. 97% of those polled said they regularly use email, while more than half use video-conferencing software such as Zoom and FaceTime. Moreover, nearly 14% use online platforms that allow clients to execute purchase decisions. In contrast, only about 9% currently offer virtual showroom tours, and less than 2% use none of those communications tools.

In additional survey findings, nearly 80% of those polled report that they currently utilize design software. In contrast, roughly 90% say they do not employ virtual reality to assist in their interactions with clients. Of those who utilize virtual reality, it is invariably used to show clients design possibilities for their kitchen, bath or other-room space.

The greatest challenge they experience with business technology, survey respondents report, is with the expense for hardware and software, and the learning curve involved in incorporating the technology into their business operations. Other challenges include keeping up with changes to both the technology and the training time involved for staff, using it with customers, and the need to be “on” 24/7.

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That is the key finding of anationwide survey of kitchen/bath dealers and design firms conducted by Kitchen & Bath Design News in conjunction with KBDN’s exclusive research partner, Bryan Research. The online survey, which drew responses from nearly 300 industry professionals, was fielded in January and mirrors the findings of other surveys regarding the use of technology in the design, remodeling and construction trades (see related Editorial).

Surveyed business owners told KBDN that they are spending, on average, 8.4% of their annual operating budget on technology, although about one in three report they expect that percentage to increase in 2025. Interestingly, nearly 4% report that they spend more than 30% of their annual operating budget on technological advancements, a reflection of both technological advances and increasingly tech-savvy clients (see Figures 1 & 2).

According to the survey’s findings, the vast majority of respondents (93.4%) report that they currently utilize some form of technology to communicate with clients and prospects. 97% of those polled said they regularly use email, while more than half use video-conferencing software such as Zoom and FaceTime. Moreover, nearly 14% use online platforms that allow clients to execute purchase decisions. In contrast, only about 9% currently offer virtual showroom tours, and less than 2% use none of those communications tools (see Figure 3).

Most of those surveyed (98%) say they are either “very” or “somewhat” satisfied with the functionality of the communications technology they are currently using (see Figure 4). A similar percentage reports that they’re satisfied with the ease of use of that technology.

In additional survey findings, nearly 80% of those polled report that they currently utilize design software. In contrast, roughly 90% say they do not employ virtual reality to assist in their interactions with clients. Of those who utilize virtual reality, it is invariably used to show clients design possibilities for their kitchen, bath, or other-room space (see Figure 5).

The greatest challenge they experience with business technology, survey respondents report, is with the expense for hardware and software (27.5%), and the learning curve involved in incorporating the technology into their business operations (27.7%). Other challenges include keeping up with changes to both the technology and the training time involved for staff, using it with customers, and the need to be “on” 24/7 (see Figure 6).

Growing Use of AI

The majority of those surveyed (83.6%) do not currently use artificial intelligence (AI) to assist with their business operations. However, roughly 37% of those who don’t use AI report that they plan to use it for one or more business functions at some point in the next two years (see Figure 7).

Of those who currently utilize AI, about 22% use it for corporate marketing efforts, while 18% employ it to develop content for their company’s website. Other current uses for AI include organizing and scheduling jobs (9.2%), creating client proposals (9.2%), making improvements to a company’s website (8.3%), and designing projects (8.3%).

For the 16% of survey respondents who are currently utilizing AI, most rave about it (see Figure 8).

“AI is my tech ‘hot sauce,’” one business owner told KBDN. “I use it for everything: content on our website, blog writing, crafting emails and proposals, researching technologies and materials.”

“I’ve used AI to create a core story for my company, as I rebranded last year and wanted help to redefine our connection,” another survey respondent said. “I also use it for content ideas on social media.”

“I’m still in the ‘discovery phase’ with AI, but I find it totally amazing and worth the expense,” said yet another.

Others share an entirely different view.

Indeed, among those who are not currently using AI, roughly 66% say they are either “very” or “somewhat” interested in using or learning about it. The balance, about 34%, report they are “not very interested” in AI at all.

More in Market Research

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Housing Starts & New Home Sales

A limited amount of existing inventory coupled with solid demand helped new-home sales end 2024 on a positive note, even as buyers continue to grapple with affordability challenges, according to the National Association of Home Builders. Builders are “cautiously optimistic” about the new-construction market for 2025, “given ongoing solid macroeconomic conditions, particularly for the labor market, as well as a post-election policy reset that seeks to eliminate unnecessary regulations,” the Washington, DC-based NAHB said. New single-family home inventory – an 8.5 months’ supply at the current building pace – is up about 10% compared to a year earlier, according to the latest available statistics. Completed ready-to-occupy inventory is up 46% compared to a year ago, said the NAHB, which estimated that the combined new and existing-home supply is currently at a four-months’ level, the lowest since April of 2024. The market has not been near a six-months’ supply since 2012.

Residential Remodeling

“Strong” results in the fourth quarter of 2024 are fueling optimism among businesses across the nation’s residential construction, architecture and design sectors, according to a report from Houzz Inc., the Palo Alto, CA-based online platform for home remodeling and design.The Q1 2025 “Houzz U.S. Renovation Barometer,” released in recent weeks, found that expectations among design and construction professionals are at their highest level since the third quarter of 2022, said Houzz.“Strong Q4 performance and recent federal interest rate cuts have bolstered confidence among industry professionals,” said Marine Sargsyan, staff economist for Houzz. “With this solid foundation, construction firms are expressing the most positive sentiment we’ve seen in two and a half years.”

Cabinet & Vanity Sales

Sales of kitchen cabinets and bathroom vanities, impacted by elements such as inflationary pressures, sluggish home sales and other industry headwinds, declined in 2024 compared to a year earlier, 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 as documented in 2024 were down 3.4% from the same 12-month period in 2023. Annual declines were reported for stock cabinets (-12.1%), as well as for semi-custom (-5.4%) and custom units (-15.6%), the Reston, VA-based KCMA reported.

Market Analysis: ‘Cautious’ Homeowners Seen Focused Only on Essentials

CHICAGO, IL — Elevated materials, labor and borrowing costs, along with lingering economic uncertainty, continue to constrain large-scale remodeling projects, with “cautious” homeowners focusing on essential repairs and targeted upgrades rather than on large discretionary remodels. KEEP READING

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Housing Starts & New Home Sales

Builder sentiment is holding steady as high home prices and elevated mortgage rates offset renewed hope about an improved regulatory business climate this year, the National Association of Home Builders reported. “While builders are expressing concerns that high interest rates, elevated construction costs and a lack of buildable lots continue to act as headwinds, they’re also anticipating future regulatory relief,” said NAHB Chairman Carl Harris. The NAHB is forecasting additional interest rate cuts from the Federal Reserve in 2025, but with inflation pressures still present, the association has reduced its forecast from 100 basis points to 75 basis points for the federal funds rate. “Concerns over inflation risks will keep long-term interest rates near current levels, with mortgage rates remaining above 6%,” noted NAHB Chief Economist Robert Dietz. The NAHB is forecasting single-family starts to post only a slight increase in 2025, Dietz added.

Residential Remodeling

After two years of decline, annual expenditures for improvements and maintenance to owner-occupied homes are expected to grow at a mild pace throughout 2025, according to the Leading Indicator of Remodeling Activity (LIRA), released in January by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. The LIRA projects that year-over-year spending for home renovation and repair will increase by 1.2% in 2025. While remodeling expenditures are expected to grow only modestly in 2025, analysts have increased their projection for the market’s size by $30 billion, or 6.4%, to $509 billion. “A solid labor market, rising home values, and continued improvement in existing-home sales are supporting greater activity in home remodeling,” said Carlos Martín, director of the Remodeling Futures Program at the Joint Center. 

Major Home Appliance Shipments

Domestic shipments of major home appliances gained ground in 2024 compared to the same 12-month period a year earlier, the Association of Home Appliance Manufacturers reported. According to the latest figures, released in January by the Washington, DC-based AHAM, major home appliance shipments totaled 76.2 million units from the time period of January through December of last year, up 2.6% from the 74.3 million units shipped in calendar year 2023. Shipment gains for 2024 were posted for refrigeration (+3.7%) and home laundry products (+2.2%). In contrast, shipments of kitchen cleanup (-2.1%) and cooking appliances (-2.1%) were both off from the previous year, AHAM said.

‘Worst’ of Housing Shortage Ending, Realtors Association Asserts

BOSTON — The worst of the housing inventory shortage is likely coming to an end, while mortgage rates have stabilized and job growth is continuing – all of which should result in steady increases in existing-home sales, according to a forecast by the chief economist for the National Association of Realtors.

After two years of sluggish home sales, existing-home sales are forecasted to rise to 4.47 million in 2025, and more than 5 million in 2026, said Lawrence Yun of the Washington, DC-based NAR, noting that household equity is also at record heights while job gains since the beginning of the COVID-19 pandemic have resulted in record-high payroll employment.

Yun said that he expects a slower growth rate in home prices during the next two years, because of additional housing supply reaching the market. He expects the Federal Reserve to maintain “a gradual approach” to easing monetary policy, offering relief to prospective buyers, and forecasts that mortgage rates will stabilize near 6% in 2025, “likely establishing a new normal.”

“Home buyers appear to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory,” Yun said. “Buyers are no longer waiting for, or expecting, mortgage rates to fall substantially. Stable mortgage rates and continued income growth will pave the way for more Americans to achieve homeownership.” ▪

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