HACKETTSTOWN, N.J. – The National Kitchen & Bath Association and John Burns Real Estate Consulting released the third quarter Kitchen & Bath Market Index (KBMI) report, which revealed positive findings for the remodeling industry. With KBMI scores above 50 indicating growth, this quarter’s KBMI of 65.4 shows sustained expansion and is consistent with Q2’s index reading of 65.7.

The index examines the economic pulse of the industry and can be used to gauge larger macroeconomic conditions, including consumer confidence, manufacturing and discretionary spending.

In addition to the labor shortage, NKBA’s membership base — made up of professionals across the kitchen and bath industry, including designers, manufacturers, retailers and building/construction firms — cites rising prices of materials, size of customer’s budgets, fear of recession and labor costs as their primary concerns. With overall industry response to tariffs mixed, some members have been able to adjust to the trade issues.

The majority (54 percent) of members report that tariffs have made a moderate, high or significant financial impact to their business, with manufacturers hit hardest at 59 percent. Notably, one in three members have had to raise prices on products and material.

Key takeaways from KBMI’s third-quarter report include:

Fourth quarter outlook is cautiously optimistic: Industry experts rate current business conditions at 61.7, similar to Q2 (62.7) and slightly lower than Q1 (67.5). Future business conditions look more positive than current ones, a trend evident over the last three quarters, with an index reading of 68.4 in Q3, 68.7 in Q2 and 76.1 in Q1. 

Positive sales growth still expected for 2019: Members expect a 3.5 percent sales growth for the full year, not quite as hopeful as the 4.7 percent and the 5.4 percent growth predicted in the previous two quarters.

Industry health is stable: Industry insiders assess the health of the kitchen and bath business at 6.7, remaining steady from Q2’s 6.6 and Q1’s 6.8. Building and construction firms and retail dealers rate the health of the industry at 6.8, followed by manufacturers at 6.7 and designers at 6.6.

American-made products are booming: While 33 percent of NKBA members have had to raise prices, another third are offering different products as a result of trade issues. This has driven business to domestic brands, as well as put higher-quality American-made products in the same price range as entry-level imports. Engineered quartz countertops and entry-level kitchen and bath cabinetry have been particularly affected. See www.realestateconsulting.com