Leading market analysts predict that a sustained housing rebound is likely to begin in the latter part of 2023 as interest rates stabilize and existing-home prices show signs of a decline. Government agencies, research firms, and industry-related trade associations have released key statistics and forecasts in recent weeks.
The National Association of Home Builders (NAHB) reported that single-family housing production remains slow due to increased market uncertainty, ongoing building material supply bottlenecks, volatile mortgage rates, and increased jitters in the banking sector. However, NAHB Chief Economist Robert Dietz noted that rising builder confidence signals a turning point for home building later in 2023. While volatility is expected in the coming months, interest rates are expected to stabilize and move lower, leading to a sustained rebound for single-family starts in the latter part of 2023.
Existing-home sales registered the largest monthly percentage increase since July 2020 in February, reversing a 12-month slide, according to the National Association of Realtors. The median existing-home price for all housing types declined 0.2%, ending a streak of 131 consecutive months of year-over-year increases, the longest on record. However, year-over-year sales were down nearly 23% from the same time in 2022, and inventory levels remain at historic lows. The annual share of first-time buyers is hovering around 26%, the lowest since NAR began tracking the data.
The remodeling sector is expected to grow nominally, posting a 5% gain this year and a 4% increase in 2024, according to the NAHB. Homeowners are continuing to utilize their homes for a wider range of purposes, such as offices, schools, and gyms.
Kitchen and bath industry executives are "prepared" to weather an economic downturn amid a lack of confidence in the U.S. economy, according to the latest quarterly Kitchen & Bath Market Indexes conducted by the National Kitchen & Bath Association and John Burns Real Estate Consulting. The KBMI revealed that surveyed industry professionals reported a 5% sales increase on a year-over-year basis in the fourth quarter of 2022, a steep decline from the 12.1% growth reported 12 months earlier. While slowing demand "is concerning" for the latter half of 2023, 31% of those surveyed said they expect positive 2023 full-year revenue growth. Industry professionals report that labor shortages are extending average project timelines, causing a growing number of consumers to cancel or postpone their kitchen and bath projects.