HACKETTSTOWN, NJ — Continued growth is being forecast for the kitchen and bath market, although ongoing material shortages, rising labor costs and the continued threat of COVID-19 were the leading concerns among industry principals surveyed in the second quarter of 2021.

That’s the key conclusion of the latest Kitchen & Bath Market Index (KBMI), a quarterly gauge of current and future conditions within the kitchen & bath industry. The index, compiled by the National Kitchen & Bath Association and John Burns Real Estate Consulting, was based on a survey of 510 NKBA members across four industry segments: design, building & construction, manufacturing, and retail sales. Results were released in late August.

An 82.3 overall KBMI score for the second quarter of 2021 topped the previous record of 79.8 from this year’s first quarter, while reflecting sharp growth over last year, according to the NKBA and John Burns Real Estate Consulting, an independent research provider and consulting firm focused on the housing industry. Estimates indicated an 11% growth in sales for Q2 vs. Q1. Future conditions, however, “are flashing warning signals,” as price hikes and lead times are beginning to take a toll, the KBMI suggests.

“We’re encouraged by the findings from our report, which reaffirms the outlook as one of growth and strong earnings,” said Bill Darcy, CEO of the Hackettstown, NJ-based NKBA. “While we’re seeing the continued delay of materials and increase in labor costs causing problems and concerns, it also shows that the skyrocketing demand for remodeling projects has continued.”

Darcy added, however, that the COVID-19 pandemic continues to have significant impact on the supply-chain and material development industries, resulting in “widespread challenges” that have led to double-digit price increases for any kitchen and bath products, while labor rates have increased an additional 10-19%.

“All of these factors have put a strain on the consumer budget,” Darcy said, adding that many NKBA members are “becoming creative, ordering months in advance to circumvent lead times and lessen the sting of price hikes.”

Nevertheless, the outlook toward the industry’s future “is positive as consumers are content to wait out and postpone projects rather than cancelling all together, signaling continued growth for the sector as the year progresses, Darcy noted.

Among the KBMI’s other key findings:

• Demand remains high: There is a clear demand for remodeling services as 60% of designers have reported a backlog of at least three months. Additionally, in Q2 2021, 55% of the building and construction industry reported zero projects cancelled, a stark contrast from the previous quarter. Furthermore, despite an increase in material costs, nearly half of retailers (46%) have begun to see a shift in typical price points demanded by customers with 89% saying their customers are shifting toward the pricier, higher-end finishes.

• Labor challenges persist: As the qualified labor pool continues to shrink with early retirement and career changes, building and construction companies scramble to incentivize their current workforce. 80% of companies report increasing labor rates to retain employees, with nearly two-thirds report rising rates of as much as 19%. This continues to increase the overall price of the project and delay the time frames of planned remodels. However, clients continue to move forward with projects and are willing to pay for products and finishes in demand.

• COVID-19’s impact lessens: While industry experts and professionals keep a watchful eye on the progression of the Delta variant of the coronavirus, members reported a significant drop in the pandemic’s impact on business, giving it a score of 4.9 out of 10, where 0 is no impact at all and 10 is a significant impact – down significantly from around 6 the previous three quarters.


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