New construction VS. remodel
Inflation has significantly impacted consumer spending and saving habits. The kitchen and bath industry relies on homeowner spend to fuel both the remodel and new construction markets. According to NKBA, even in the wake of economic downturn, many homeowners are still moving forward with remodel plans — especially those plan that were plagued by supply chain disruption in 2021.
Remodel rates aren’t expected to be nearly as high as 2021 and 2022, though. NKBA forecasts medium-scale remodels to decline by 18% throughout 2023.
Kevin McJoynt, director of product management, fixtures for Gerber Plumbing Fixtures says there are still mixed signals in the marketplace, making it hard to determine the outlook for residential new construction.
“There continues to be mixed signals regarding the outlook for new residential construction; low home inventory, but high interest rates. Overall, home price increases and high interest rates have resulted in a shift from single family construction to multifamily,” he explains. “It stands to reason that remodeling will slow because existing owners did their projects during the COVID-19 pandemic, and younger families are staying in rental units longer. That can always change but, for now, we are cautiously optimistic for the balance of 2023.”
Katie Hayes, director of product management, fittings, Gerber Plumbing Fixtures agrees, adding that necessary repairs and aging in place will continue to drive the remodel market. “Increasingly, remodels are driven by necessary repairs, system improvements, or functional needs of homeowners. Specific to the bathroom space, we see a few overarching trends persisting such aging-in-place adaptations, removing tubs and expanding the showering footprint and experience, and adding freestanding tubs to support rest and relaxation.”
In Salem, Oregon, Beth Rhoades, president of C&R Remodeling, says the remodeling pace throughout 2023 has been steady. “The pace of 2023 has been consistent with the last few years for production. Calls have slowed down but the overall quality of lead has improved. Job size has maintained as well,” she says. “With the interest rates, homeowners are turning back to their current home to look at improvements and long term planning.”
McJoynt summarizes that the top challenges hindering new home starts are home prices, interest rates and availability of skilled labor. “Remodeling will follow the eventual rise in new home buying,” he says. “Although it’s likely that current homeowners who wanted to remodel have largely completed those during the pandemic.”
Hayes agrees, but adds that with home prices on the rise, homeowners may choose to continue remodeling their existing home rather than purchase a new home at a higher price and interest rate.