The National Kitchen & Bath Association (NKBA) has released its baseline Kitchen & Bath Market Outlook for 2022. Matching sentiments from its 2021 Kitchen and Bath Market Index (KMBI) , the association predicts that the kitchen and bath industry will experience a 19% year over year (YOY) increase in spending, rising from $167 billion to $199 billion for residential kitchen and bath construction and remodeling.
In an atypical trend, spending on new construction will see a 21% increase, though new housing starts are only predicted to increase by 6% in 2022. This can be attributed to a growing backlog carrying over from 2021 and marginal improvement in builder construction cycle time.
According to John Burns Real Estate Consulting data, it is expected that home prices will continue to appreciate. Overall, these prices will rise 9% versus approximately 6% for inflation. This strong home market and an increase in home value bodes well for the kitchen and bath industry as homeowners look to capitalize on their home’s equity.
‘Prime Remodel Vintage’ Homes Expected to Drive Projects
Aside from new construction, it is also expected banks will begin to ease credit standards for home equity line of credits (HELOCs). Consumers will use those funds to remodel. According to the Market Outlook when financed by HELOC, the average spend per kitchen and bath remodel more than doubles.
Homes built during the mid-2000 housing boom are now considered by many to be ‘outdated’ and are expected to drive increased demand for kitchen and bath remodels. The report found that the industry is expecting over 16% growth from these ‘prime remodel vintage’ homes or houses between 20 and 40 years old that were not renovated during the initial COVID remodeling boom.
With that in mind, DIY is expected to remain strong in 2022. The report forecasts a 9% growth in spending, and overall, DIY spending is expected to account for $25.9 billion in 2022, sticking mostly in lower to mid-price point projects.
“As we begin 2022, the industry as a whole continues to be optimistic and is forecasting continued rapid growth in both new construction and remodeling. The expected growth rate for 2022 is one of the highest predicted in the history of KBMO,” said Bill Darcy, NKBA CEO. “Even with this increasing demand, however, we cannot dismiss the current risks we are facing.”
Challenges on the Horizon for the Kitchen and Bath Industry
According to this latest Market Outlook, the impact of labor availability will remain a major obstacle. Findings show that between 2022-2025, unfavorable demographics will cause near-zero growth in the 20-65 age bracket, which makes recruiting more difficult in a rising demand environment.
While an escalating talent shortage has been a long-time obstacle impacting the industry, especially as the number of projects has increased exponentially since the beginning of the pandemic, this challenge has led to many projects become delayed and adding to substantial backlogs.
Additionally, growing demand will continue to exacerbate ongoing supply chain challenges. Delays and other complications will be more likely to occur, due to the complex nature of the industry’s supply chain network. According to the data. According to the data, prices account for 6% growth in expenditures, driven by inflation, product shortages and rising labor costs.
“The challenges faced by the kitchen and bath industry are not new but are compounding. For example, the results from our Q3 Kitchen and Bath Market Index show that led times for domestic and foreign raw materials are well over 6+ weeks and has many within the sector struggling to keep up with demand in today’s economy,” continues Darcy.
“However, the kitchen and bath industry is resilient. In fact, we are seeing the industry evolve before our very eyes as across the board, stakeholders are proactively taking new and creative steps to address these obstacles – and the fruits of their labor are visible as new opportunities arise.”
To learn more about the key findings from NKBA’s baseline 2020 K&B Market Outlook report, visit here.
If you are registered for KBIS and would like to schedule an interview with Bill Darcy, CEO, NKBA or Tricia Zach, head of research, NKBA about the NKBA 2022 Market Outlook and/or NKBA 2022 Design Trends, please email email@example.com.