The kitchen and bath industry has continued its period of relative expansion into the third quarter of 2019, with an index score of 65.4 on the National Kitchen and Bath Association (NKBA) and John Burns Real Estate Consulting's latest Kitchen and Bath Market Index (KBMI). The growth rate has slowed marginally from the second quarter, when the index posted a reading of 65.7. Any reading above 50 indicates positive growth in the industry.

The KBMI is based on online survey data from NKBA members across three metrics: the respondent's last quarter sales growth compared to the same quarter in the prior year, expectations for the next quarter's sales compared to the same quarter in the prior year, and the respondent's view of the overall health of the industry.

NKBA's membership base of professionals across the kitchen and bath industry cite the labor shortage, the rising price of materials, the size of customer's budgets, the fear of recession, and labor costs as their primary concerns.

The overall industry response to tariffs has been mixed, with some segments of the K&B market able to adjust to the trade issues better than others. More than half of member respondents reported tariffs have made a moderate, high, or significant financial impact on business. Manufacturers have been hit the hardest by tariffs, with nearly three in five reporting financial impact. One-third of member respondents reported raising prices on products and materials as a result of tariffs. Engineered quartz countertops and entry-level kitchen and bath cabinetry have been particularly affected by changes in pricing.

The industry outlook for the fourth quarter is cautiously optimistic, according to the KBMI. Industry experts rate current business conditions at 61.7, similar to the second quarter and down from the first quarter rating of 67.5. Future business conditions look more positive than current ones for respondents.

Respondents reported an expected 3.5% sales growth for the full year in 2019, down from the 4.7% and 5.4% growth predicted in the previous two quarters.

Industry respondents rate the health of the kitchen and bath business at 6.7 out of ten, similar to the assessments from the previous two quarters. Building construction firms and retail dealers have the most positive assessment of the industry's health.

“The KBMI arms consumers and our nearly 50,000 industry members with the knowledge they need to best understand the remodeling market and economic climate,” Bill Darcy, NKBA CEO, said in a public statement. “We’re pleased to find the industry is still growing and that future conditions are optimistic. The KBMI also sheds light on industry challenges, such as the labor shortage, which we hope to support through our NextUp program by educating youth on the many career opportunities available in the kitchen and bath space.”