The National Kitchen & Bath Association (NKBA) and John Burns Real Estate Consulting have released their Q4 2019 Kitchen & Bath Market Index (KBMI), which reveals an energetic expansion despite showing signs of a slower pace of growth throughout the year. With KBMI scores above 50 indicating growth, this quarter's KBMI of 69.8 is well above that of previous quarters (Q3: 64.3, Q2: 65.4).

The KBMI is the definitive gauge of kitchen and bath industry conditions based on findings across four primary industry segments: Design, Building & Construction, Retail Sales and Manufacturing. The index also serves as a valuable lens into several critical economic indicators, including consumer confidence, discretionary spending and the strength of the housing market.

"A strong Q4 is great news for industry professionals and consumers going into 2020," said Bill Darcy, NKBA CEO. "As we move into the new year, we're encouraged that this dynamic industry continues to grow and business outlooks are positive."

"The health of the kitchen and bath industry is an invaluable proof point for clients looking toward the strength of the housing market," said Todd Tomalak, senior vice president of research for John Burns Real Estate Consulting. "We're pleased to continue this quarterly report with NKBA to provide real-time insights as home-buying and building trends shift so rapidly."

Key takeaways from the KBMI fourth-quarter report include the following:

• Future outlook is exceedingly optimistic: Members feel more positively about future conditions (77 index reading) than current ones (67 index reading). This can be partially attributed to an increase in home builds and sales, which open up additional construction and remodeling opportunities.
• Economic confidence is solid: Despite economic uncertainty throughout 2019, NKBA members rate the current state of the economy at a 7, on a scale of 1 to 10 (with 1 being extremely weak and 10 being extremely strong).
• Industry is at its healthiest: Members rated industry health at a 7.2 out of 10 in the last quarter of 2019, up from 6.7 in Q3, Q2 and Q1.
• Skilled labor shortage tops industry challenges: With 750,000 jobs expected to open in the design and construction industry through 2026, NKBA's membership base — comprising nearly 50,000 professionals across the kitchen and bath industry — continues to list skilled worker availability as a primary concern, followed by cost of materials and labor. One way NKBA is addressing these challenges is through its NextUp program, which aims to recruit and empower the next generation of skilled workers. Darcy noted that the industry's momentum and future potential make the NKBA's efforts to help alleviate the skilled labor scarcity more important than ever. "This is why we're encouraging our members to get involved every step of the way through our multi-pronged NextUp program to expose young people to the many different career paths in our very own industry," he said.
• Countertops are the craze: Countertops are consumers' primary splurge for both kitchen and bathroom jobs. They're also trading up on stoves/ranges and cabinets in the kitchen, and vanities, medicine cabinets and tiled showers in the bathroom. While awareness and interest in "smart" lighting and plumbing is increasing, fewer consumers are spending on newer devices in these categories.

Methodology note: Historical revisions to the KBMI have been incorporated in this release due to changes in the weighting methodology that occurred in Q4-2019. The revised index weights three inputs: 55 percent for current sales conditions, 15 percent for next quarter sales conditions, and 30 percent for current state conditions.