At the Kitchen Cabinet Manufacturers Association, we always try to keep an eye on the housing industry. The kitchen is the heart of the home after all, and if housing isn’t doing well, then cabinets aren’t doing well. Here’s an update on how things are looking for housing lately.
Annual growth in the national market for home improvement and repair is expected to slow considerably by the end of the year, according to the latest Leading Indicator of Remodeling Activity (LIRA) report from the Harvard Joint Center for Housing Studies. Gains are expected to shrink from 7.5% in 2018 to 5.1% in 2019.
According to the 2019 Houzz Kitchen Trend Study, 78% of homeowners surveyed noted that cabinets were the most important feature to upgrade during a remodel. This means that if remodeling activity is expected to slow, it could adversely affect cabinet companies.
The report cites slowing house price appreciation, flat home sales activity and rising mortgage rates are decreasing owners’ interest in making major investments in home improvements this year. In addition, The National Association of Homebuilders (NAHB) recently reported on how the shut down is negatively impacting the housing industry:
- FHA-insured single-family loans can still close during the shutdown but that decision will be determined by each individual lender
- No new multifamily firm commitments will be issued
- No Real Estate Assessment Center (REAC) inspections will occur during the shutdown
- Future reports on items like housing starts and new home sales could be postponed
The Office of Single-Family Housing will not endorse Home Equity Conversion Mortgages (HECMs and also referred to as FHA reverse mortgages) during the shutdown.
The government is now closing in on one month of the shut-down and it is not yet known how long it could last, and what the long-term impacts might be on housing for the remainder of the year.
Despite the seemingly negative outlook, improvement and repair spending is still set to expand this year to more than $350 million. And, remodelers' confidence is holding steady as many factors for the remodeling market (including demographics and economic growth) remain favorable.
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