The National Kitchen & Bath Association reports that designers are cautiously optimistic about the second half of 2023. The NKBA/John Burns Kitchen & Bath Market Index (KBMI) Q2 2023 notes that expectations for next quarter’s sales are notably higher, with a rating of 65.5, compared to the year-on-year rating of 62 in Q2 2022. While some consumers are postponing large-scale projects until economic conditions stabilize, others are proceeding with remodeling endeavors by opting for smaller, more affordable projects.
The rating for Q2 sales of kitchen and bath products and design services was 48.6 out of 100 mainly influenced by economic uncertainty, ongoing cost pressures, persistent inflation, and elevated mortgage rates. This current index is slightly lower than the 58.6 reported in the previous quarter and significantly lower than the 73 reported a year ago.During second quarter of 2023, kitchen and bath activity experienced a notable slowdown, particularly in the retail and manufacturing sectors. The industry witnessed flat sales revenue, decreased foot traffic, and a decline in manufacturers’ orders, all indicating a reduction in kitchen and bath activity. This deceleration can be attributed to the impact of higher prices and interest rates. For certain firms, the slower growth is seen as a welcome respite after the unexpected surge in demand during the “COVID period”. However, for other businesses, it requires adjusting their expectations as market conditions return to a more “normal” level.
Although there has been a slight decrease in demand, the kitchen and bath industry still maintains a strong position. The industry’s health modestly declined to 65.2 in Q2 2023, a slight drop from the previous quarter’s 66.7.
Economic uncertainty continues to loom over the industry. The Federal Reserve’s ongoing rate hikes and persistent inflation levels above historical norms have sparked fear of a potential recession among kitchen and bath professionals. As a result, some consumers are choosing to put their remodel plans on hold, adding to the industry’s concerns. The unpredictable economic landscape is causing cautiousness among professionals in the kitchen and bath sector. The design firms in the kitchen and bath industry are experiencing a reduced average backlog of 2.6 months for projects.The industry professionals attribute this to a slowdown in demand and the normalization of capacity, which has led to noticeably reduced lead times for design projects. Consequently, the backlogs for design work in the kitchen and bath sector have seen a significant decrease.
