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From Home Furnishing Business

Statistically Speaking: Ecommerce Continues Double-Digit Furniture Industry Growth

The explosive ecommerce growth comes in spite of a report indicating only 14% of consumers actually prefer to purchase furniture online (Euclid Analytics). This leaves brick and mortar retailers scratching their heads trying to determine how to give consumers the shopping experience they apparently prefer.

Despite predictions that the rate of ecommerce growth in the furniture industry would slow, ecommerce sales have continued at over 20% annually in recent years. This article updates Statistically Speaking’s June 2018 article Ecommerce Strengthens Foothold on Furniture Industry.

The retail furniture industry reached $112.8 billion last year, a growth of 7.0% over 2018 (Figure 1). While total furniture and bedding retail sales have maintained robust growth through 2018, 2019 year-to-date has slowed – only increasing 3.6% from 2018 Q3 YTD to 2019 Q2 YTD.

Ecommerce Total U.S.
Internet sales of all consumer products from all retail outlet types, ecommerce companies or brick and mortar stores selling from internet websites, are estimated to have reached $524 billion in 2018 (Table A).

In 2018, overall online/ecommerce retail purchases for all consumer products slowed, but still grew 3.6 times faster than all other retail channels. At $269 billion year-to-date, ecommerce growth is 5.9 times faster than the first half of 2018. Total retail sales increased by 5% from 2017 to 2018, compared to 14% for ecommerce.

A recent report published by the Census Bureau segments sales by ecommerce retailers by merchandise lines through 2017 giving a glimpse at penetration by product category.

Among different types of ecommerce retailers, online sales of furniture and home furnishings products was the second highest product category in sales at $48.7 billion increasing 22.3% from 2016 to 2017 (Figure 2). Ranking number one in sales growth, computer software including video games, grew by 23.9% to reach $15.4 billion in 2017. At $66.7 billion, clothing and clothing accessories had the highest sales among ecommerce retailers and with an annual increase of 11%.

Sales of combined furniture and home furnishings through ecommerce retailers have increased from $7.9 billion in 2006 to an estimated $59.7 billion in 2018 – an average per year growth since 2009 of 23% (Table B).

While internet purchases have continued to gain a bigger piece of the retail pie over recent years, online sales represented only 8.6% of all retail sales for all consumer products in 2018 (Table C). And mid year-todate that percentage has declined slightly – down to 7.5% with mail orders picking up to 4.4%.

Brick and mortar retailers have tried various approaches to competing with ecommerce retailers by attempting to market through their own websites, but with little success. Furniture and home furnishings stores lag behind other retailer types in terms of ecommerce sales as a percent of total sales (Table D). Ecommerce sales were 1.2% of total sales in 2017 for brick and mortar furniture and home furnishings stores, compared to 3.8% for clothing stores, 2.9% for sporting goods, hobby, and book stores, and 2.1% for electronics and appliance stores. While the success of online retailing among brick and mortar merchants has increased over the years, the ecommerce sales comparison remains vast between brick and mortar stores and pure ecommerce retailers.

Furniture Industry Channel Growth Of the $112.8 billion furniture industry, sales can be distributed between (1) brick and mortar stores, (2) ecommerce retailers plus ecommerce sales by brick and mortar companies, and (3) mail order houses. In 2018, furniture and bedding sales by brick and mortar stores (non-internet) totaled $87 billion compared to $23.09 billion for ecommerce and $1.9 billion from mail order houses (Table E). As shown in Table F, ecommerce continues to gain a greater share of the furniture industry – jumping from 3.8% of sales in 2009 to 21.2% in 2018. This includes not just sales by ecommerce retailers, but also online sales by brick and mortar retailers of all types – including furniture and home furnishings stores, department stores, warehouse superstores, etc. Meanwhile, brick and mortar share of total sales fell from 93.5% in 2009 to 77.1% in 2018 — decreasing 6.6 percentage points from 2017 to 2018.

The total furniture and bedding industry grew 7% last year. It is estimated that brick and mortar store sales of furniture grew only 3.2% while ecommerce retailer sales grew 25.7 (Figure 3). Over the course of nine years since the bottom of the recession in 2009 furniture sales through ecommerce have grown at an annual rate (CAGR) of 27% compared to brick and mortar retailers at 3.0%. Total industry sales have grown at an annual rate of 5.1%.

Table G shows the annual year-over-year growth of the three outlet types. Note that the rate of ecommerce sales growth peaked at 31.2% in 2015, but has slowed slightly to an estimated growth of 25.7% in 2018.

Home furnishings products – floor coverings, window treatments and home accessories – have shown consistently higher online sales than furniture as consumers are still finding it easier and less daunting to buy home furnishings online without seeing or touching them in a store. However overall growth of furniture products sold via ecommerce has been higher than home furnishings. Table H shows that home furnishing ecommerce sales have grown from $6.5 billion in 2009 up to an estimated $37.4 billion in 2018 – a jump of 477%. During the same time period, furniture ecommerce sales rose 761% from $2.8 billion to $23.9 billion.

Furniture retailers, who have historically enjoyed high margins, claim that although ecommerce home furnishings companies are taking business from brick and mortar stores, many ecommerce retailers have yet to make a profit. And there is some truth to that. For example, ecommerce home furnishings giant Wayfair, sold almost $7 billion in 2018 across five branded furniture and home furnishings websites. But gross profit of $1.5 billion was offset by $2 billion in operating costs. Much of that operating cost has been spent on acquiring new customers and repeat purchasers, which they hope will pay off in the long run. Wayfair also opened its first retail store in Natick, MA and an outlet in Florence, KY.

Perhaps the primary obstacle brick and mortar stores face with ecommerce retailers is the consumer’s online exposure to a vast selection of thousands of furniture items and efficient websites to drill down to exactly what they want. This, coupled with easy checkout, fast delivery and liberal return policies, are challenges traditional retailers have yet to fully formulate a strategic response.

Take 5: Pamela Danziger

Home Furnishings Business: How important is celebrity branding to the sale of luxury goods?
Pamela Danziger: The brand thinks that celebrity is important. Brands have been using celebrities for advertising campaigns for years. Now, with social media, they are starting to turn to them more to stimulate having more eyes on them, to try to give them more attraction and more influence. I know there was a study recently about these influences losing influence. I think it’s a strategy that’s been overdone. Too many brands think that there is some magic bullet—if you do A, B, and C, that suddenly you’re going to stimulate sales and grow your brand and all will be well with the world, but that isn’t the case. You’ve really got to understand who your customers are and what influences them, and it may be that a celebrity endorsement may be more of a turnoff for many potential customers.

HFB: What do you define as the price points for luxury goods? For example, a fabric sofa at $2,000 or more?
Danziger: What we have to understand is that luxury isn’t some objective qualification, something that’s imposed upon it or determined by the industry or the manufacturer. Luxury is determined by the consumer and how they view the product that you are offering. Everybody wants luxury; not everybody wants to pay luxury prices, whatever that could be. There’s just no objective criteria that industry can apply that will ultimately translate into how the consumers view it. To my mind, the consumer’s perception is your business reality. HFB: Besides the decorator channel, what retailers do you perceive as luxury retailers for furniture? Pottery Barn? Restoration Hardware? Danziger: People that have money to spend are very skeptical of brands that call themselves luxury. Brands that try to elevate themselves into that luxury realm. They may look at those as all marketing and little substance. Pottery Barn might be a luxury to one segment of the population; Restoration Hardware might be a luxury to another segment of consumers. But Restoration Hardware might be considered mass market by the true ultra-high end, affluent consumers, who are the target for luxury.

HFB: With the absence of furniture brands, what is the impact on luxury goods?
Danziger: For the true luxury brands in the marketplace, like Louis Vuitton and Prada and Gucci and Chanel, brand is everything. They have spent over a century building that brand and the consumer perception. There is tremendous potential in the furniture industry to get more brand conscious. Ethan Allen has done it, Restoration Hardware clearly has done it. West Elm and Pottery Barn have done it, Williams Sonoma has done it. There’s a lot of opportunity to build a brand. It takes a lot of work, a lot of heavy lifting to go from no name to being a real name that stands for luxury.

HFB: Consumers are driven to the lowest cost. What is to blame: manufacturing, retailers or the consumer’s lifestyle?
Danziger: They look for the most cost effective solution when they are buying because if they save money here, they have more money to spend there. Affluent consumers, if we look at them as a group, are extremely savvy in the purchases they make, about what they are looking for, and how to find it. They will scrimp and save in one category to spend lots of money in another category that is meaningful to them. That’s why you see Mercedes Benz cars in the parking lot of Walmart. Price is always important, and with so many options available to consumers, Wayfair, Ashley, there is so much out there, there is so much competition. You have to be very strategic about where you price and what you offer, and building a high value proposition for your products is exceedingly important today. Without it, you are always going to lose sales to the lowest common denominator.

HFB: Is luxury only for the $250,000 income household that represents only 2.64 percent of the U.S. population?
Danziger: No, luxury is for when you come down to what I call the HINRYs, the high income, not rich yet, with incomes from $100,000 to $250,000, there are about 30 million of them, versus about 5 million of the $250,000 and above. These can afford maybe one luxury, but they can’t afford all luxury. I think that when you move further up, they have much more discretionary income and can indulge across more categories, and more regularly. But the HINRYs are the emerging and the next generation luxury consumers, one that the home furnishings industry really needs to focus on. There are the ones who are in the life stage. The ones who spend the most on home furnishings are those who are buying their first or second house, from age 30 to 54. That’s the age range when you are going to find a lot of HINRYs. They are on their way up in their careers, and becoming more established.

HFB: What is the biggest disruption you see happening in the overall luxury market and also specifically, in furniture?
Danziger: One of the biggest disrupters right now is the resell market and it’s going to come to furniture too. It’s harder to ship furniture, but luxury consignment company The Real Real is being very disruptive in fashion sales and the rental market also, where you rent an outfit for a weekend because you only need it for the weekend. We are going to see that translating into furnishings. I look at Interior Define, and I’ve written about them as being disruptive, because of the process where you design your own sofa and it takes 8 to 16 weeks to get delivered. I don’t think that’s a sustainable business model. You have to turn your products around faster and give people what they want. If you spend $10,000 on a sofa, they don’t want in in 16 weeks, they want it tomorrow. That’s a big challenge for furniture retailers, especially at the high end.

HFB: What trends are you observing in online vs. in-store shopping?
Danziger: All shopping experiences start online today. That’s the major takeaway. That doesn’t mean all sales are completed there, but they start online. So for furniture retailers, they’ve got to have a very sophisticated online presence designed to draw people to the store. They need to be using digital methods to attract people. Furniture brands need to have very good presentation online. They need to have a store locater, to help people find them. Wayfair, Josh & Main, and other digital providers of home furnishings are really a very big threat. Consumers really do view Ikea as more of a luxury brand than a mass brand that is quality.

HFB: What is your best advice for furniture retailers?
Danziger: You have to focus on the people. You have to understand who your customers are, you have to understand what they are looking for when they shop, you have to understand what makes them come into your store, what they expect to find and whether they are finding it in your store. You need to focus deep insights on your customers. They are the people you depend upon. Then you need to look at the people you have in your store and whether they are being served. How does the staff interact with the public? Retailers often do not invest the time and attention they need invest in training, re-training. They do not invest in the research needed to understand their customers. Those are keys that are going to cause brick and mortar retailers to fail.

Editor's Letter: Have We Become Too Transactional?

That is true. But maybe the industry has become too black and white, losing the opportunity for the other party to say, “He didn’t have to do that.” This give and take is the lubricant of a business relationship. In our digital driven world that has standard processes, the barrier is often how we would handle it on the computer.

The focus of this issue is the consumer, but more specifi cally, “what does the consumer want?” To answer this, the magazine’s research arm, FurnitureCore, conducted a national survey of consumers who purchased furniture in the past year.

Additionally, we asked those on the front line – the furniture retailers – what they believed the consumer was searching for. Finally, we asked other retail mavens their perspective on furniture retailing.

We found some insight, beyond the baseline of price /speedy delivery, to include retail experience and ease of shopping. However, no silver bullet emerged as something that would drive the consumer to the physical store, or for that ma er, to the digital store.

While the virtual experience was going to be the strategy that would drive the experience to the next level, to date the results have not delivered the promise.

A recent le er from a reader who opened his store in 1972 wearing bell bo oms and a puka shell necklace – yes, in California – who is still in business after 42 years expressed his frustration with the industry, not at the consumer, but the supply side. His frustration was with the disconnect between factory owners and business owners.

“There used to be a trust and an understanding that both of us were in business together. Owners wanted us to visit the factory, they wanted to know me. That has gone away. I never felt so abandoned.”

In our consumer research, we found the same perspective, “Do they care about my business? Do they want to take the time to understand my needs?”

Maybe the silver bullet that we are looking for is the people—more specifi cally, the owners. I realize that large regional chains cannot have an owner at the door greeting customers. However, maybe sometimes a presence can be virtually spread. Has there ever been a “selfi e” taken of an owner with the customer?

And not to let the manufacturers off the hook—I remember Mr. Broy hill at market greeting every retailer, thanking them for their business.

Maybe we need more “They didn’t have to do that.”

Editor's Letter: Unprecedented

Historical industry data carefully transferred from black notebooks to Viscalc to Excel to Access to SQL (and now considering Mongo) over the years should provide more insight as to what will occur in the next year of 2020. Without a doubt, the economy will end its current cycle but not necessarily in 2020, unless unprecedented occurrences accelerate the process. And that is the problem. The focus of this issue is the same as every October: The State of the Industry 2020. As you will read, we are forecasting another year of anemic growth. However, that was writt en before this lett er and before the accelerated calls for impeachment of the President due to unprecedented actions of individuals in the government. I believe that no matt er their political tribe, consumers are tired of the noise.

However, while processing through the data one thing became obvious. There is no one industry, but 404+ individual markets that have unique challenges. While the growth was anemic year to date, the range in growth was signifi cant as be seen in the table above.

Within these markets, individual retailers are dealing with specifi c challenges such as new retailers invading their markets. If it is not new retailers, it is existing retailers expanding into their merchandising price points as consumers race to the bott om with a perception that good is good enough. With this competitive tug of war, many older retailers are evaluating why to continue without a specifi c exit strategy. By the way, did I mention the weather?

The recent storm in Beaumont, Texas, which was the repeat of three years before occurred just as demand was returning to some sense of normal. It is a repeat performance. Interestingly, only 75% of the replacement demand, according to FurnitureCore’s industry model, had occurred. What will the consumer do? ‘Why bother?’ is the att itude for many. Research indicates that it is impacting price points.

What are we saying? As they say, “Politics is local.” Furniture retailing is as well. Understanding your market and your business performance is the most important. Ignore the noise.

Cover Story: State of the Industry

Needless to say, the external factors, such as tariff s and ecommerce, and internal factors, such as aging owners retiring and young consumers looking at renting instead of buying (that is if they can ever aff ord a house) any forecast becomes a “SWAG.” For those that don’t know what that stands for, email me.

When developing this, Florida was threatened with a direct hit from Hurricane Dorian. Everyone’s att ention was glued to the television, watching the forecasted path. It occurred to us that we could create our own spaghett i presentation of models and measure the accuracy of each. With that much exposure, many in the industry would stop prognosticating. Seriously, there are so many factors that are considered in arriving at the forecast. We fi nd the consumers and incorporate into our model. Unfortunately, one deviation can cause a major change in direction. The table below presents last year’s forecast with what actually occurred along with the consensus forecast for this year. Note the deviations, such as housing starts.

That is what happens in forecasting. Just like Hurricane Dorian, Florida was spared a direct hit, but the entire East Coast felt the power and endured the destruction. Unfortunately, the furniture industry forecast is similar. A downturn will happen in the near future. Exactly when and what sectors cannot be precisely determined, but for sure find the storm shutters.

The following presents the statistics behind the forecast, followed by the perspectives of those on the front line, followed then by those on the sidelines. Just recognize the ultimate perspective of the consumers. If 60% of consumers believe we are going to have a recession, we are in a recession.

Our Perspective — Forecast Spending, both by consumers and the government, appears to be the driving force behind forecasted steady, but slowing, economic growth this year and in 2020. Holding back the economy, however, is business investment in equipment, weaker inventories and structures and forecast soft housing and exports. Global declining manufacturing activity in the world’s advanced economies is putting pressure on the U.S. expansion. And then there’s the upside-down yield curve. Most economists predict a recession in 2020 or 2021, though most feel it will be short-lived.

The Furniture Industry Industry sales are forecast to finish this year 3.2% growth, well behind last year’s increase of 6.6% the year. Depending on recession fears, growth should moderate again in 2020 to around 2.4%.

The Bedding industry, the fastest growing segment coming out of the last recession, faced stiff competition in 2018 from imports along with disruption from consolidation and an increased Internet presence. This year the Bedding industry began to recover and should expect growth of 3.1% while all other furniture is on track to increase 3.2%. Both furniture and bedding sales should slow further over the next two years to under 2.5% growth. (Table B)

Distribution Channels. Retail sales, excluding motor vehicles and gasoline, should experience around 3.9% growth this year, with much of that growth taken up by e-commerce, leaving only about 2.0% growth for in-store sales. Except for internet shopping, retail sales are forecast to slow or go negative this year for all other broad distribution channels, according to the Census Bureau (based on sales through July). For Furniture Stores, coming off good growth in 2018 at 6.3%, the first half of this year has been a sobering experience for many. Furniture Stores are on track for sales to fall about 1% this year based on performance. A more robust fourth quarter than last year could pull these numbers up some. Home Furnishings Stores are also experiencing flat or declining sales compared to the first two quarters of last year, down 1% second quarter year to date. Electronic Shopping and Mail-Order Houses continue to experience high growth, up 12% thus far in 2019 Q2 YTD. (Tables C and D)

Prime Furniture Buying Population. Millennials (ages 23 to 38 this year) are firmly entrenched in the 25 to 34 age group and continue to pour into the 35 to 44 age group, the fastest growing category under age 65. This group is expected to increase 1.3% this year and continue to accelerate over the next few years. The younger 25 to 34 group is also growing, but more slowly going forward. Many in this age group who delayed entering the workforce are finally finding jobs, though not necessarily the ones that match their educations. Meanwhile Gen-Xers in the 45 to 54 age group, continue to decline. Of particular concern to the furniture industry is this age group tends to be at peak earnings, and a decline in number could slow consumer spending somewhat. Baby Boomers are still impacting the industry as the older age groups continue to grow and downsize, although not necessarily to less expensive homes. (Table E)

The U.S. Economy Many economists feel that overall the economy is healthy and that the forecasted slowing of Gross Domestic Product to within the 2% range is consistent with an economy that is slowing down to a more moderate growth rate which is not necessarily unhealthy. Unemployment is forecast to continue at the natural rate. There isn’t too much inflation or deflation. So again, except for an unexpected major domestic or global event, a recession, if any this next year, should be short-lived.

The uncertainty regarding trade wars with China, is being blamed for at least some of the forecasted GDP slow down.

The Home Furnishings Business economic forecasts that follow are a compilation of predictions by leading government agencies and U.S. economists. Figure 1 provides the complete sources.

Real Gross Domestic Product. GDP, which measures the nation’s production output, should continue to slow to an estimated growth rate of 2.2% this year and slow further through 2021 (Table F). The economy barreled forward last year, but slightly lower than the anticipated 3.0% annual growth. After a dismal fourth quarter last year that experienced only 1.1% growth in GDP, the first quarter of 2019 posted a surprising 3.1% increase. The second quarter slowed to a 2.0% rate. According to the U.S. Bureau of Economic Analysis (BEA) the second quarter slowing in real GDP primarily reflected downturns in inventory investment, exports, and nonresidential fixed investment. These downturns were partly offset by accelerations in consumer spending and federal government spending. A large number of experts feel this historical expansion will continue to cool with a mild recession looming toward the end of 2020 or 2021. (Table F)

Payroll Employment and Unemployment Rate. Since the end of 2017 through the second quarter of this year, the U.S. added 3.7 million jobs. Employment growth slowed, however, beginning in the fourth quarter of last year and has continued to slow, with the second quarter of this year adding only 437,000 jobs. The number of non-farm workers is forecast to grow 1.6% this year compared to 1.7% in 2018 and slow further through 2021 to 0.5%. Job openings exceed new hires.

On the positive side, the Bureau of Labor Statistics reports wage growth for nonsupervisory workers ticked up through the first half of this year and the number of hours worked rose. The share of the population employed is the highest since 2008. On the negative side, retail establishments continue to shed workers as stores continue to close and the telecom sector continues to shrink. No doubt businesses will be looking for workers in the future. Tighter immigration laws may have a larger impact on specific industries, for example Agriculture, where undocumented workers have been heavily employed. (Table G)

Unemployment is forecast to continue at the natural rate rising slightly over the next two years. This year should average 3.7% unemployment and grow to 4.2% in 2020. The short-term unemployment rate (those unemployed for less than six months) is near its lowest level since the Korean War in 1953. (Table H)

Inflation. The Federal Reserve is predicated to hold inflation steady over the next two years with 2019 averaging 1.8% and the next two years at 2.0%. (Table I) Stock Market. The stock market continues to do its own thing – rapidly reacting to geo political conditions then shrugging them off just as quickly. The Dow Jones started the year around 23,000 and at press time in September was at 27,000. The average for the year is forecast at 26,000 and the average next year at over 27,000 or higher if a recession doesn’t occur. (Table J)

Consumer Prices. The furniture industry has struggled to get prices up. Prices began to rise in 2019, but not in the manner the industry had hoped. With new tariffs imposed and the threat of additional tariffs this Fall, furniture industry prices are forecast to grow 2.7% and 3.0% in 2020. Meanwhile all consumer goods prices are forecast to grow 1.7% this year and 1.8% in 2020. (Table K) Gasoline Prices. Barring any international incident that would disrupt the crude oil and gasoline industry, the U.S. Energy Information Administration predicts gasoline prices will remain stable through 2020, forecast at an average of $2.62 per gallon of regular this year and $2.71 in 2020. The government is sticking to its forecast that the United States — already the world’s biggest oil producer — will become a net exporter of crude and petroleum products in 2020. The good news for the economy is lower gas prices reduce the cost of transportation for food and every other consumer product resulting in raised profit margins. It also gives consumers more disposable income to spend. (Table L)

Consumer Confidence. While fickle, Consumer Confidence remains relatively stable despite trade rhetoric, recession threats, and political unrest. This year began with a Confidence Level of 120 (1982 = 100) in January following less than expected consumer spending in December 2018, but quickly jumped over 10 points the following month. Confidence is forecast to remain around 130 to 135 the rest of the year, barring any dramatic events. According to Lynn Franco, Senior Director of Economic Indicators at The Conference Board, regarding August 2019 level of 135.1, “Consumers’ assessment of current conditions improved further, and the Present Situation Index is now at its highest level in nearly 19 years. Expectations cooled moderately, but overall remain strong. While other parts of the economy may show some weakening, consumers have remained confident and willing to spend. However, if the recent escalation in trade and tariff tensions persists, it could potentially dampen consumers’ optimism regarding the short-term economic outlook.” (Table M)

Prime Interest Rate. This short-term interest rate is the most commonly used in the banking system. The average rate for the year should be at 5.2% following a rate cut in September to 5.0% by the Federal Open Market Committee (FOMC) of the Federal Reserve. Some economists predict another rate cut shortly to 4.75% where it is forecast to remain through 2020. The Prime Rate is generally increased if the FOMC determines that the pace of inflation within the U.S. economy is too high so as to bring inflation under control. (Table N)

The Housing Market 30-Year Mortgage Interest Rate. Interest rates for 30-year mortgages remain very low, forecast to average 4.0% this year and 3.7% next year. (Table O)

New and Existing Home Sales. New single-family home sales picked up this year and are expected to grow 7.7% thanks to good housing starts in 2018. However, new sales are forecast to slow to 3.2% growth in 2020. The industry’s main obstacle to ramping up construction is that it has become more expensive for builders to break ground on new projects. Meanwhile, existing home sales have been struggling lately to gain momentum because prices have risen beyond many buyers’ means. Sales of existing homes are forecast to decline again this year 1.1% but pick up slightly in 2020 to 3.4% growth. Low mortgage rates are giving existing-home sales a slight boost.(Table P)

Housing Starts. The boom to housing starts predicted for 2019 never occurred, leaving demand high and inventories low in many markets. The blame is being placed on scarce workers, high costs to break ground, and long permitting processes in many cities. Predictions are now that 2020 will make up the difference for single-family starts which are forecast to be down 0.7% this year, but rebound in 2020 to 7.0%. The growth in multi-family starts, however, is forecast to be slow – up 1.1% this year and down 0.5% in 2020. (Table Q)

Home Prices. In July this year, the Census Bureau reported the median price of a new home sold in the U.S. was $312,800 and an existing home sold, tracked by the National Association of Realtors (NAR) at $280,800. The price of new homes is forecast to be down 2.5% this year, but rise 1.5% in 2020. In July, almost half of new homes sold were priced below $300,000, reflecting a shift among home builders to building more-affordable homes. Meanwhile existing home sale prices should increase 4.0% this year and 3.3% in 2020. (Table R)

Recession Fears: Many economists believe that recession fears are overblown. Others say signs of a possible recession keep stacking up and at some point, it no longer makes sense to keep explaining them away. In the September Wall Street Journal monthly survey of 60 economists, the question was asked: When do you expect the next recession to start? Less than half, 42.5% thought a recession would occur next year and another 35.0% felt a recession would occur in 2021. And according to the Duke University/CFO Global Business Outlook survey released mid-September, 53% of chief financial officers expect the United States to enter a recession prior to the 2020 presidential election. And two-thirds predict a downturn by the end of next year. Finally, add climate change to the list of economic worries, which the insurance industry ranked as the top risk for 2019. It beat out concerns over cyber damages, financial instability, and terrorism. In 2017, insurance companies paid out $138 billion in damage claims from natural disasters such as hurricanes, floods, and wildfires.

And don’t forget 2020 is an election year, which oddly enough historically usually bodes well for the furniture industry.

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