Kitchen & Bath Industry Expected To Grow In 2022

Robert Isler

The good news is that another year of solid growth for the industry is expected on top of the impressive finish in 2021. The bad news is that last year’s challenges are not going away and could get even worse.

According to the recently released NKBA 2022 Kitchen & Bath Market Outlook study, kitchen and bath revenues are expected to grow by 19% for the second straight year, an astounding feat in today’s environment. It translates into projected annual revenues of $199 billion, a record. By segment, kitchen remodels are expected to increase more than 20% and bathrooms by 18%. New construction, which should account for nearly $120 billion in revenues vs. $80 billion for upgrades, is forecast to grow by 21% vs. a gain of 16% for remodels. That 21% includes a story behind it since only 6% of the projected increase will be due to rising housing starts. The remainder is expected to come from the completion of delayed installs from last year (9%) and price inflation (6%).

Kitchen and bath revenues are expected to grow by 19% for the second straight year in 2022.
This year’s Market Outlook release is a breakout of projects by DIY vs. professional. DIY is expected to account for $26 billion in industry sales, a nearly 9% gain over last year. Rising project costs are undoubtedly causing some homeowners to choose the DIY route. However, 87% of industry sales, $173 billion, involve professionals. And the professional segment is expected to grow at more than twice the DIY rate this year.

A notable change from 2021 is expected spending by project size. Last year, high-end projects were on fire with the growth of well over 20% vs. the previous year, while increases for low-spend projects were barely into double-digits. This year, the situation has completely reversed, with lower-level projects expected to gain nearly 21%, double that of high-end. Ever-increasing costs across all kitchen and bath products are likely a major factor. The headline story is the mid-level project, which is forecast to grow by almost 26%. Clearly, the demand for remodels remains strong, with backlogs from 2021 providing a strong tailwind. However, some homeowners are pausing hoping that pricing will edge down, while others are simply scaling back.

Economic and housing trends and indicators for 2022 are encouraging for the upcoming year. A wave of new communities will be built in 2022, which will help boost new construction. The number of single-family homes entering their prime remodel years (20-40 years of age) are experiencing a steep rise that should continue through 2026. Additionally, although inflation is pegged at about 6%, single-family homes are forecast to appreciate an additional 9% over last year’s double-digit gains. Finally, banks are expected to ease credit standards for home equity lines of credit this year, a further impetus for some to remodel.

The outlook for 2022 isn’t all rosy, though. The top challenges of 2021 will not be going away any time soon. Although product delivery delays are not limited to the kitchen and bath industry, the supply chain within our industry is more complex than most. Combine that with a greater reliance on imports than most industries and the apparent challenges. This issue is likely to resolve well before the other major challenge, a shortage in skilled labor. This has been a recurring industry issue for years, but it just may get worse before it gets better. This is because two million people have left the workforce since 2020, and demographic trends call for negative population growth through 2025 for those aged 20-65, which represents the prime employee pool. Hopefully, the outreach initiatives that the NKBA has set into motion to attract younger people to the trades will pay dividends and act as a counter.

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.

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