Statistically Speaking: Post-Pandemic Furniture Industry Prices Surge

July 29, 2021  by HFBusiness Staff in Business Strategy, Industry   

Furniture Prices Play Catch Up Most furniture and home furnishings industry products have been in a price slump since the mid-2000s as imports exploded into the United States. During the pandemic, furniture and bedding prices started to climb noticeably in the second half of last year as the economy began to partially reopen and really took off during the first and second quarters of this year. Table A shows the quarterly price index averages 2020 Q1 to 2021 Q2 (April/May). The price shifts discussed here refer to two overlapping periods, not directly tied to quarters. The first compares the CPI at the end of December 2019 vs. the CPI in May of this year, which measures where we were a couple of months before the pandemic to where we are now with the recovery. The second data point focus is on the first five months of 2021 comparing the CPI at the end of December last year to May of this year.

Since the start of 2020 through May of this year, furniture and bedding prices are up 7.7%, weathering the pandemic downturn in 2020. Most of that growth has occurred during the first five months through May, where prices have jumped 5.4% compared to December last year (Table A).

As many consumers upgraded their outdoor spaces during the quarantine, prices of outdoor furniture began to climb right away (Table A). As of May, the “other furniture category,” of which outdoor is a large part, has grown 14.7% since the beginning of 2020 prior to the pandemic, with most of that growth coming throughout 2020. For the first five months of this year compared to last December, the category is up 4.9%.

Living room, kitchen, and dining room furniture prices have also shown major growth this year, up 7.8% since the start of the year through May. Since the start of 2020 pre-pandemic to May, prices are up 10%. Prices for bedroom furniture, however, have lagged other categories, increasing only 1.7% since the start of last year through May (Table A).

Meanwhile, prices for major appliances, in short supply with consumers on hot home buying and renovation spending sprees, have skyrocketed above all furniture categories, growing 21.8% since the start of last year, with most of that growth occurring last year. Since the start of the year, major appliance prices are up 4.4% through May (Table A).

Consumer prices in other home furnishings products fluctuated during the pandemic, with many declining substantially before increasing (Table B). Rising slightly in 2020 Q3 to an index of 100.2, floor covering prices have only recently exceeded prices from January of last year. Prices are up 3.2% for floor coverings since the beginning of this year through May. Since the start of last year (just prior to the pandemic) to May 2021, clocks, lamps, and decorator item prices have grown 2.8% and nonelectric cookware and tableware have grown 5%. Television prices are up 2.1% in total since the start of last year after falling rapidly during all of 2020. After declining significantly, the first five months of 2021 have seen television prices increase 7.4%. Prices are yet to fully recover for dishes and flatware, up 0.6%, and window coverings, down 1.4%, since the start of 2020 through May of this year (Table B).

Not surprisingly, the price of outdoor equipment and supplies rose sharply during the second half of 2020, increasing 4.5% since the start of the pandemic through May of this year. Prices of tools, hardware, and supplies have grown steadily since late last year — up overall 5.8% since the start of January 2020 (Table C). Rising prices in the furniture industry can’t be attributed to wholesale import prices. Prices for most furniture categories and major appliance imports fell during the first half of 2020 and are slow to recover. Only two categories, nonupholstered furniture and institutional furniture/ kitchen cabinets, have just reached prepandemic prices in May. Upholstered furniture, office furniture, and appliance prices are still slightly below the beginning of 2020.

Historical Growth in Consumer Prices The early to mid-2000s were considered steady and stable growth years for the furniture and home furnishing industries and provide a healthy benchmark for analyzing price growth. Since that time, the industry has weathered a recession and now a pandemic. Overall, the CAGR (compound annual growth rate) has steadily increased each year for most consumer items since 2005 (Tables E, F and Figure 1). Since 2005, price increases over time have been staggering in some of the key areas, such as healthcare, with household furnishings and operations noticeably different with only a 2.2% increase since 2005 (Table E).

In the broad furniture and home furnishings product categories and other miscellaneous items, such as apparel, sporting goods, and computers, prices have historically decreased since 2005, many significantly (Table F). Furniture and bedding prices overall have declined 6.4%. Major appliances are up slightly at 2.1%. Other home furnishings items such as window coverings, decorative accessories, dishes and cookware have seen price declines since 2005, between -27.6% and -57.1%. Televisions prices have fallen 94.8% and computers prices are down 73.3% (Table F).

Looking at the historical indexed growth in prices of the key consumer products and services featured in Table G, only household furnishings and operations remained flat throughout time. Prices of new cars and trucks have also increased very slowly. As shown in Table H, the consumer price indexes for food at home (groceries) as well as food away from home (take-out and restaurant dining) have historically continued to climb. Annual growth rates approach 2% for food at home and 3% for food away from home (Figure 1). Both saw prices increase more than 3% during the pandemic. Consumer prices for furniture generally declined from about 2006 to 2015 and have yet to catch up to those levels (Table I) despite the recent surge during the pandemic. Since 2017, all categories have increased prices, with major appliances growing 4.6% from 2019 to 2020 and another 8.2% monthly average this year to May 2021 (Figure 1). As shown in Table J, the home furnishings category has not seen the same surge in prices as furniture and major appliances since the pandemic began. With the exception of floor coverings, at a CPI of 111.6 in May of 2021, all the other home furnishings categories are still well below 2005 prices.

The graphical contrast in the growth in the prices of televisions compared to cable and satellite television services is shown in Table K. As technology has made televisions better and more affordable, prices fell almost 100% since 2005 (down 94.8%) compared to the cost of cable services increase of 50.7%. The trajectory of annual price increases since 2005 for key consumer items and services is shown in Figure 1. This table shows the compound annual growth rate for selected time periods. Although furniture and appliances have lagged behind historically, they have shown some of the best growth of all product areas this year through May. As the world continues to adapt to the ongoing economic results of the pandemic, price increases in the furniture industry are starting to become the new reality.