Building Products

1Q24 Kitchen and Bath Insights: Middle-Market Malaise; Luxury-Market Strength

Matt Saunders photo

Matt Saunders

Elizabeth LaJeunesse

May 23, 2024

Our Kitchen & Bath Market Index indicated weak sales in 1Q24. But here’s the twist: Weak sales does not indicate lackluster sales across the kitchen and bath (K&B) market. It reflects a struggling middle-market consumer paired with a more stable premium K&B customer.

Here are strategies to navigate this contrast:

Building product manufacturers: Can you maximize revenues by raising prices for the less price-sensitive premium segment while lowering prices or offering rebates for the rest of the market? Offer products that convey “affordable luxury.” 

Homebuilders: If you build entry-level homes, focus on standardizing your kitchen and bath while aiming for “affordable luxury.”

Remodelers: Be upfront with your clients about ways they can save money on their projects. Counsel them frankly on need-to-have vs. nice-to-have upgrades to build trust, save them money, and help them adjust their expectations to the new pricing environment.

Designers: If you are already in the luxury space, you are most likely outpacing the market. Those working in lower price points might consider branching out into the premium segment.

Our research team focuses on building products pricing. One sector we study closely is the K&B space. Every quarter, we conduct a Kitchen and Bath Market Survey in proud partnership with the National Kitchen + Bath Association (NKBA), culminating in our quarterly Kitchen & Bath Market Index (KBMI) report. 

Middle-Market Malaise

Building materials prices have risen by 40% since 2019, and homeowners struggle to keep up. Many firms we spoke with this quarter told us that consumers still routinely express sticker shock when pricing comes up. They told us that lower-end and middle-market homes are underperforming due to these price sensitivities. Affordability issues help explain the flux of homes coming into the resale market with outdated kitchens and baths—it all ties back to pricing.

Luxury-Market Strength

Throughout last year and into 1Q24, high-end K&B consumers expanded the size and scope of projects and upgraded to higher finishes. Over a third of design firms we surveyed in April confirmed that their clients still lean toward higher-cost projects. The typical ticket size of K&B design firms we surveyed this spring was about $75K, although many (around 1 in 5) routinely took on projects well over $150K. 

The resilience of customers at this price level is consistent with a longer-term trend of growing wealth among the wealthiest people. Recent Federal Reserve data show that two-thirds of our nation’s household wealth is now concentrated in 10 percent of households.

Because of these massive gains in wealth, the premium segment has become far less sensitive to higher interest rates and costs. This healthy luxury market is also one reason design firms (which typically cater to the premium segment) were bullish about price increases that their customers could accept this year. 

The 1Q24 KBMI report reveals that while the K&B market is currently experiencing weak sales, it may soon see some relief. Firms across the industry say they expect sales to start recovering and anticipate +6% nominal revenue growth in 2024 on average. 

The Near-Term KBMI rating of 72 in 1Q24 shows that sales expectations are stronger than one year ago (1Q23 rating of 68). If this strong positive sentiment bears out, we may have a better spring selling season for resale homes next year, with more up-to-date kitchens and baths in available inventory.

We’d love to hear more about what you’re seeing in your sector and how it’s influencing your business. Please contact Matt Saunders or Elizabeth La Jeunesse to discuss what you’re seeing.

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About The Author

Matt Saunders photo
Matt Saunders
Senior Vice President of Building Products Research
Matt leads JBREC’s building products research practice, which includes overseeing our research reports, our macro building products thesis and forecasts for both repair and remodeling and new construction.
Elizabeth LaJeunesse
Senior Manager, Building Products Research
Elizabeth is responsible for participating in the preparation of consulting assignments and research projects related to Building Products, including compilation and analysis of market data, preparation of market reports, and custom survey development.

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