Kitchen & Bath Business/KBIS Directory 2025 - 40

INDUSTR Y OUTLOOK
Restoration Revival
The kitchen
and bath
industry is
positioned for
a robust year
ahead, with
renovations
outpacing
new builds
in 2025
BUDDING
NORTH
AMERICAN
REGIONS
SOUTHWEST:
TEXAS
SOUTHEAST:
FLORIDA
CAROLINAS
GEORGIA
MIDWEST:
COLUMBUS, OH
INDIANAPOLIS, IN
KANSAS CITY, MO
LOUISVILLE, KY
MADISON, WI
MINNEAPOLIS, WI
MOUNTAIN
STATES:
ARIZONA
COLORADO
After a sluggish few years, the outlook is positive for growth in the
U.S. residential kitchen and bath industry for 2025. Remodeling will
likely outperform new construction, as many existing homeowners
are not moving for a variety of reasons, including higher interest
rates and the desire to age in place in their own residences.
According to a recent National Association of Home Builders/
Westlake Royal Remodeling Market Index that measures current
market conditions and future indicators, the level was 63. Robert
Dietz, NAHB's SVP & chief economist, says anything above 50 is
an indication of positive conditions.
The aging housing stock also plays a role in the remodeling
outlook - as many of those homes need renovations - as does
the $30 trillion in home equity for existing homeowners.
" Our analysis shows that homeowners living in mid-range
homes (typically valued in the $400K-700K range) are the most
likely to tap home equity, " said Bill Darcy, the National Kitchen &
Bath Association's global president and CEO. " These homeowners
thus are more interest rate sensitive than other household
segments. Lower short-term borrowing costs are a key catalyst
to watch for this group next year. "
View from the Ground Up
For new construction, Dietz says builders are cautiously optimistic,
and the NAHB expects a 1% gain in 2025 for single-family starts.
Final data for 2024 reported that multi-apartment construction
was down 27%, but this may stabilize toward the end of 2025.
40 JANUARY | FEBRUARY 2025
" In 2024, new construction spending on kitchen and bath
products outpaced the remodeling end market, " said Darcy.
" We expect this to reverse in 2025. Elevated builder standing
inventory levels, greater resale supply and higher-for-longer
mortgage rates are headwinds for kitchen and bath new construction
spending. "
The number of recent inclement weather-related events is
also infl uencing a decrease in new residential construction.
According to Aaron Enfi nger, president-elect of the National
Association of the Remodeling Industry, building material and
labor resources that may have been used to build new homes
are being redirected to restoring homes that have been damaged
during these natural disasters. For homeowners, homebuyers
and owners of rental properties, Dietz says insurance premiums
are more than likely going to continue to increase over the next
few years.
The Take on Tariffs
Building material prices have escalated since the pandemic,
including lumber at a 10% increase. The outlook is an increase
in demand for lumber in 2025, which means lumber prices will
continue to go up.
" In recent NKBA surveys, kitchen and bath fi rms have cited
the rise in building materials costs as the third-largest constraint
to their growth prospects, following consumer uncertainty and
skilled labor availability, " said Darcy.
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Kitchen & Bath Business/KBIS Directory 2025

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