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US Kitchen and Bathroom Market Sales Trends 2023
[Aug 4, 2023]

According to the Catalina Report on kitchen and bath industry trends , the sharp downturn in the U.S. housing market caught up with kitchen and bath product manufacturers and marketers in the first half of 2023. Manufacturers' dollar sales (shipments minus exports plus imports) may have declined by 5.6% in the first half of the year. Unit sales fell about 2.0% in the first half of the year. However, the rate of price increases slowed as inflationary pressures subsided. Dollar sales are down this year compared to the 10.8% increase for all of 2022. As the Federal Reserve raised interest rates, sales declined in the first half of 2023 along with new home construction and existing home sales. Rising interest rates have caused demand for housing - both new and existing homes - to decline sharply over the past year.

Sales of cabinets and countertops declined at more moderate rates in the first half of 2023. Shower doors also outperformed overall industry trends, gaining share. Customized products appear to have grown in share, reflecting continued growth at the higher end of the market. On the other hand, inventory products saw the largest declines. The sharp decline in sales of inventory products may reflect inventory adjustments across the distribution channel as overall demand declines.

Builder purchases could have been the weakest market in the first half of 2023 since total housing starts declined by 11.3 percent. Builder weakness was centered in the single-family market, which was down 13.8 percent in the first half. On the other hand, multi-family housing construction increased sharply. Purchases are hurt by the sharper drop in single-family home construction since a new single-family home, on average, has more bathrooms than new multi-family housing unit. Single-family homes also have larger kitchens and bathrooms with higher-end products installed.

Meanwhile, kitchen and bathroom remodeling actively slowed in the first half due to a 20.7 percent drop in existing home sales. Catalina, however, estimates the number of remodeling jobs could have increased in the first half. This indicates that the residential remodeling and replacement market in the first half was increasingly dependent on non-movers to stimulate sales. Non-movers have been investing in their existing home since they are reluctant to make a home purchase with a higher interest rate mortgage. Rising home prices and changing lifestyles, as a result of the pandemic, is also stimulating homeowner investments to upgrade their kitchens and bathrooms. During 2023, however, Catalina estimates homeowner projects are less extensive than in 2022, which is impacting retail sales.

Foreign-based manufacturers were most affected by the kitchen and bath market decline. Catalina estimates import shipments declined by 30.1 percent in the first half of 2023. Conversely, U.S. manufacture shipments could have increased by 3.8 percent. Again, the sharp drop in imports could have reflected the steeper drop for stock products. Channel inventories may have also been adjusted as supply chain issues subsided. Sourcing is also shifting away from Chinese manufacturers who saw a 42.0 percent drop in dollar impact shipments in the first half of 2023. Competition in Cambodia, Canada, Germany, South Korea, and Vietnam took up some of the slack.

Demand for kitchen and bathroom products could begin to bottom out in the third quarter of 2023. This could be seen in overall U.S. housing demand which is estimated to decline in single-digits in the third quarter after declining at double-digits over the past year. Single-family housing starts also led builder trends in June 2023. Single-family starts are beginning to turn around due to the lack of inventory of existing homes for sale. Meanwhile, commercial sales remain strong along with double-digit gains in non-residential building construction spending. These trends are benefiting from favorable demographics and a slowing of Federal Reserve rate hikes.