Results from the second quarter NKBA/John Burns Kitchen & Bath Market Index (KBMI) study were a stark reminder that the kitchen and bath industry is not immune to overall economic turmoil. The overall KBMI for Q2 was 70.4, the lowest since Q4 2020. The index is an accumulation of members’ read on the industry’s health and current and future conditions — all of which had noticeable declines for the quarter.
Although any Index rating above 50 signifies expansion, the Q2 KBMI shows clear warning signs. Nearly half of the kitchen and bath professionals surveyed said they are not confident in the U.S. economy. The prediction for the Q3 Index based on respondents’ forecasts fell to the lowest reading in over two years, dropping to 61.8. They said rising costs and economic uncertainty are driving the decline.
The recent KBMI showed that increased materials costs and inflation had overtaken supply chain disruptions as respondents’ primary concerns. Members said year-over-year prices had risen an average of 11%, with over 40% indicating that they are passing on the increases to clients. Others said they are altering purchase decisions to rein in costs, finding lower-priced alternatives or maintaining costs and accepting lower profit margins.
Many consumers pause planned home improvements as inflation remains high and interest rates keep rising. In fact, 59% of design firms reported client postponements or cancellations for Q2, a marked increase over the 48% in Q1. Building and construction companies experienced similar slowdowns, with 54% noting Q2 postponements or cancellations compared with 46% in Q1.
According to respondents, reasons for clients’ pullback include concern about inflation’s impact on disposable income and the decline of ready cash for remodels due to increased mortgage rates.
Robert Isler is a Market Research Analyst at National Kitchen & Bath Association. He develops macroeconomic and industry survey analyses for nearly 14,000 member companies comprised of manufacturers, designers, showroom owners, and specialists across North America. He also disseminates reports on current and anticipated trends within the $158 billion kitchen and bath industry.