# Persistent High Interest Rates and Housing Slump Drive Third Consecutive Month of Cabinet Sales Decline
For kitchen and bath dealers, designers, builders, and procurement professionals, the numbers coming out of the cabinet industry offer a clear warning: the downturn is deepening. U.S. cabinet sales fell 8.5% year-over-year in May 2024, marking the third consecutive monthly decline, according to the latest Trend of Business survey from the Kitchen Cabinet Manufacturers Association (KCMA) [1]. This drop is not an isolated event but part of a broader trend tied to persistent high interest rates and a cooling housing market. Single-family housing starts dropped 5.5% in May 2024 compared to April, on a seasonally adjusted annual rate [2], while the average 30-year fixed-rate mortgage remained above 7% for most of June [3]. The remodeling sector, a key driver of cabinet demand, is also losing steam: the NAHB Remodeling Market Index fell to 65 in Q2 2024, its lowest level since Q2 2023 [4].
This article examines the evidence behind the slowdown, explores ripple effects on material suppliers and the workforce, and outlines how forward-looking manufacturers are adjusting production and pricing strategies. We also break down what these trends mean for cabinet dealers, kitchen designers, builders, and procurement professionals who need to navigate the months ahead.
The Housing Market: A Persistent Headwind
The connection between housing market activity and cabinet sales is well established. New construction and home sales drive demand for kitchen and bath cabinets, both in new homes and in renovation projects tied to home purchases. In May 2024, the Census Bureau reported that single-family housing starts—the most relevant metric for cabinet demand—fell 5.5% from April to a seasonally adjusted annual rate of 982,000 [2]. That represents a 14.4% drop from May 2023 [2]. While multifamily starts rose modestly, the single-family segment remains the primary driver of cabinet installations.
The culprit is clear: mortgage rates that refuse to budge. The average 30-year fixed-rate mortgage remained above 7% for most of June 2024, as reported by Freddie Mac's Primary Mortgage Market Survey [3]. Rates have hovered in the 6.9% to 7.2% range since April, following a brief dip in early spring. For perspective, two years ago rates were below 5%. This sustained cost of borrowing has frozen the resale market—homeowners with low-rate mortgages are reluctant to sell, leading to low inventory—and it has priced out many potential first-time buyers. As a result, new home sales have stalled, and builders are pulling back on starts.
Builder Sentiment and Permit Activity
The National Association of Home Builders (NAHB) Housing Market Index for June 2024 fell to 43, down from 45 in May, signaling that builder confidence remains in negative territory (a reading below 50 indicates poor conditions). Permit activity for single-family homes also declined 3% month-over-month in May [2]. Builders are responding to higher carrying costs and slower sales by reducing starts—a move that directly reduces orders for cabinets in new construction. For cabinet manufacturers who depend on large builder contracts, this has meant a significant drop in volume orders.
The Remodeling Slowdown: Fewer Projects, Smaller Budgets
While new construction is a major segment, remodeling has been a relative bright spot for cabinet sales in recent years. However, that cushion is now shrinking. The NAHB Remodeling Market Index (RMI) fell to 65 in the second quarter of 2024, down from 67 in Q1 and from 70 a year earlier [4]. The RMI measures remodeler confidence in current and future market conditions; any reading above 50 indicates growth, but the downward trend is unmistakable. The “current conditions” component—which includes major additions and alterations—dropped to 64, while future expectations slid to 66 [4].
This decline reflects a combination of factors: homeowners are less willing to take on large renovation projects when their home equity is uncertain (home price appreciation has slowed in many markets) and when borrowing costs for home equity loans or cash-out refinancing are steep. Many homeowners are also deferring discretionary projects due to overall economic uncertainty. The result is fewer kitchen and bath remodels—and fewer cabinet orders.
Impact on Material Suppliers and Workforce
The slowdown in cabinet sales is rippling through the supply chain. Material suppliers—from plywood and MDF manufacturers to hardware and finish providers—are seeing reduced orders as cabinet makers trim production. Some suppliers have reported that their own lead times have shrunk, indicating softer demand. Additionally, the workforce is feeling the pinch: some manufacturers have implemented temporary layoffs or reduced overtime hours, while others are struggling to retain skilled workers amid uncertain order books. For dealers and designers, this could mean longer lead times for certain custom or semi-custom products as manufacturers balance reduced staffing with fluctuating demand.
Manufacturers Respond: Production and Pricing Strategies
Facing three consecutive months of sales declines, cabinet manufacturers are not standing still. Based on industry reports and anecdotal evidence from KCMA members, several strategic shifts are under way:
1. Production Cuts and Inventory Management
Manufacturers are scaling back production schedules to better match current order levels. Rather than building inventory for anticipated demand that has not materialized, many are operating on shorter, more flexible runs. Some have reduced shifts or temporarily idled certain lines, particularly for builder-grade stock products, where the drop has been sharpest. Custom and semi-custom shops are also tightening capacity, often by reducing overtime and relying on just-in-time material ordering.
2. Pricing Adjustments and Promotional Tactics
To stimulate demand, some manufacturers are offering trade discounts, rebates, or bundled pricing on popular door styles and finishes. These promotions are often targeted at dealers and builders, with the goal of filling order books for the remainder of 2024. However, sustained discounting could pressure margins—a delicate balance in an industry with already thin profitability. For dealers, this means an opportunity to negotiate better pricing on bulk orders or to request matching on competitor offers.
3. Focus on Value-Added and Service
Rather than competing solely on price, some manufacturers are emphasizing value-added services such as faster turnaround, enhanced design support, or improved logistics. For kitchen designers and builders, this can mean shorter lead times or more flexible delivery windows. Manufacturers are also investing in digital tools to streamline the specification and ordering process, reducing errors and rework—a benefit that procurement professionals should watch for.
4. Diversification of Customer Base
Many manufacturers are actively seeking to diversify away from heavy reliance on new home construction. They are targeting the repair-and-remodel segment more aggressively, even as that market slows. Others are exploring commercial or multi-family opportunities, although those sectors face their own headwinds from elevated financing costs. For dealers and designers, understanding a manufacturer’s exposure to different end markets can help gauge supply reliability and future pricing.
Implications for Cabinet Dealers and Kitchen Designers
For dealers, the current environment calls for cautious inventory management. With orders declining, overstocking could lead to costly markdowns or carrying charges. However, lean inventory risks losing sales if demand picks up unexpectedly. The best approach: maintain a flexible mix of fast-moving stock items while relying on manufacturer drop-ship programs for less predictable orders. Dealers should also renegotiate terms with suppliers, seeking extended payment cycles or volume discounts.
Kitchen designers face a more challenging landscape. Homeowners are hesitant to commit to large projects, so designers must sharpen their value proposition: emphasize ROI, energy efficiency, and timeless design. Offering tiered project scopes—from simple door replacements to full remodels—can help capture clients at different budget levels. Building trust through accurate cost projections and realistic timelines is critical when confidence is low.
Implications for Builders and Procurement Professionals
Builders should expect longer lead times for custom orders as manufacturers adjust capacity, but potentially shorter lead times for stock products as inventory builds. Procurement professionals should lock in pricing for committed projects, as further discounting may be available but could be reversed if demand rebounds. They should also vet manufacturers' financial health—a prolonged downturn may force some smaller shops to close or consolidate.
For builders, the drop in starts presents an opportunity to renegotiate material pricing with suppliers eager for volume. However, caution is warranted: if the Federal Reserve cuts rates later this year, a quick market turnaround could leave builders scrambling for materials. Diversifying supplier bases and maintaining flexible contracts is prudent.
Looking Ahead: What the Next Six Months May Hold
All signs point to continued headwinds through at least the end of 2024. The Federal Reserve has signaled that rate cuts are unlikely before fall, and even then, mortgage rates are expected to remain above 6%. Single-family housing starts may slip further before stabilizing. The RMI is likely to stay low, with remodeling activity picking up only when rates ease and home sales recover.
For the cabinet industry, this means more lean months. But history shows that downturns are followed by rebounds. Manufacturers that strategically reduce capacity without compromising quality, dealers that manage cash flow carefully, and designers that stay close to their clients will emerge stronger. The key is to adapt now—tightening operations, rethinking pricing, and deepening customer relationships—so that when the market turns, they are ready to capture the upswing.
Conclusion
The evidence is clear: persistent high interest rates and a cooling housing market are driving three consecutive months of falling cabinet sales. The 8.5% year-over-year drop in May, combined with falling housing starts and a slowing remodeling market, signals that the industry has entered a sustained soft patch. Manufacturers are responding with production cuts, promotional pricing, and a focus on value-added services. Dealers, designers, builders, and procurement professionals must adjust their strategies accordingly. By staying informed, agile, and customer-focused, they can weather the downturn and position themselves for the eventual recovery.
Sources: [1] KCMA Trend of Business Survey, May 2024; [2] U.S. Census Bureau, New Residential Construction, May 2024; [3] Freddie Mac, Primary Mortgage Market Survey, June 2024; [4] NAHB Remodeling Market Index, Q2 2024.