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From Home Furnishing Business

Cover Story: 2020 Power Distribution Channels

Based upon research from Colliers research team and COSTAR real estate database for furniture stores (NAICS Code 442110) nationwide in 2019, the 378 transactions for 5.06 million square feet declined 46% in 2020 to 203 transactions, totaling 3.1 million square feet. For 2021, the decline continued to 124 transactions (38%) and 1.68 million square feet. What does the future hold? Ben Haverty, a seasoned industry veteran and vice president of Colliers Retail Service Group, summed up what has happened best: 2020 Shrink and Survive “In 2020, as the pandemic exploded, retail furniture focused on surviving by shrinking unproductive stores, renegotiating overpriced leases and working to expand their digital sales.”

2021 Stabilize and Plan “In 2021, retailers that survived 2020 are focused on product supply chain and logistic issues to capture the robust bounce back in sales, but at the same time started the long planning process of opening new store(s) in their existing and new markets.”

2022 Expand and Strive “2022 will see the fruit of the 2021 planning. We will see a surge in new furniture store openings from national chains, regional players ready to expand into new markets and native digital brands that have discovered they need physical showrooms to complement their digital business.”

Adding a different perspective for the houseware/home furnishing retail segments, there were approximately 2,900 closures and 1,200 openings between January 1, 2018 – November 1, 2021. Eliminating Mattress Firm and Pier 1, the gap narrows to approximately 1,800 closures and 1,150 openings. Another industry powerhouse, Julius M Feinblum (JMF), believes 2021 has been better than most believe with the more entrepreneurial independent retailers taking advantage of opportunities. From Julius’ perspective, 2022 and beyond will see a continued expansion, not only with the established retailers but new entrepreneurs, especially the second generation of new immigrants that see retailing as a low cost of entry business. While the growth of brick and mortar stores will continue, the major question is in what distribution channel. Figure 1 and Figure 2 present the historical growth and decline of retail stores compared to the retail sales by distribution channel.

The pandemic, while interrupting growth in the second quarter of 2020, returned in the balance of the year and has continued in 2021. However, the retail stores growth was in home furnishings stores but not furniture stores.

HISTORICAL PERSPECTIVES

The industry discusses distribution channels often but not what causes the need for new distribution channels — the consumer need for a different retail experience. The initial graphic places the distribution channels in perspective of time and the furniture purchasers that dominated the purchases. Prior to the 1960’s, the furniture market was dominated by National Chains (JCP/Sears/ Wards) that provided value to the growing middle class demanding quality at a good price and satisfied the move to the suburb. Fashion was defined by Homes and Garden magazine and supported by television shows such as Price is Right. Local Department Stores, before the mergers, defined the upper-end consumer expectations. The Warehouse Store format (Levitts), with inventory in racks overhead, addressed the consumer need for instant gratification and has continued to this day with “next day delivery.” The warehouse clubs such as Costco emerged to satisfy the search for a better deal along with the 1-800 Number Retailers Independents took the mantel from department stores for better goods as the product/services of the merged local department stores failed to satisfy regional states and traditions.

Some independents continued to grow, becoming Regional Chains still run by second and third generations of furniture retailers, a tradition that continues today. Designers expanded but have expanded their services to more than the “manor born” to now the two income households that do not have time to shop for furniture – in essence personal shoppers executing the consumer’s personal style not that of the designer.

And then came e-tailers that provided the selection/price at 10 o’clock with a click of the mouse. If not a purchase, at least the shopping research. With the pandemic, more consumers completed the research with a purchase.

From a false start in the 1980’s, the major manufacturers brands such as Broyhill, Lane, Ashley, Bassett, Thomasville and many more expanded their gallery concepts into free-standing Manufacturer Verticals stores mimicking the successful Ethan Allen in partnership with retail partners. This concept has significant potential but failed with outside corporate financial ownership and lack of management depth. Entrepreneurial retailers expanded their consumer-targeted stores such as Crate and Barrel into Lifestyle Stores, delivering to a very focused consumer target the look and price they wanted.

There are survivors in each of these distribution channels still servicing a consumer base. However, their rise and fall will be determined by an ability to deliver the retail experience that their consumers seek. As each of these channels emerged, existing retailers anticipated their channel would be decimated. However, those that accepted the challenge of change survived. Look at the graphic. Some are in the dustbins of industry history and others have prospered. For example, Furnitureland South is now at the top of our Power 50 Retailers – Independents. Graphic A tracks the performance of each distribution channel over the past five years.

But the pandemic has created significant growth for many distribution channels and many retailers have seen a financial bonanza. The question is whether a return to historical levels of demand will result in a reversal of their marketshare.

A major question is, what will the furniture store look like in the future? There is a move to smaller footprints with a more curated selection.

What will emerge from 2021 and into the future will be different but for sure it will address the needs of the emerging generation of consumers.

HOME FURNISHINGS BUSINESS’ RETAILERS 10TH ANNUAL POWER 50

T he pandemic in the first quarter of 2020 could have dealt a death blow to the foundation of the furniture industry. The smaller independents, already dealing with the expansion of the regional chains, now faced with this new external factor could have decided enough was enough. Regional chains with their more entrepreneurial management teams innovated and managed to continue selling in spite of shutdown orders.

What was an obstacle to the traditional retail sectors became a boom for others as the status of “essential retailer” allowed mass merchants, value retailers, appliance stores and home improvement stores to expand their selection of furniture and gain marketshare. Leading this marketshare STEAL was the direct-to-consumer distribution channel, gaining 5%+/- in 2020. Topping the list was Wayfair, surpassing Amazon in the furniture segment.

After a tumultuous second quarter, it became obvious that consumer expenditures for furniture and bedding was going beyond pent-up demand and reflected the change in consumer perception about their home and living environment. After a slow start due to restrictions, Furniture Stores regained their competitiveness. Graphic A presents a comparison of monthly sales.

The traditional furniture retailers, lead by the regional chains, surged back. However, the next challenge emerged – the lack of product to sell. The old strategic advantage was important again as long term relationships with manufacturers became the difference between “product” to sell and “promises” to sell. While quarter to quarter comparisons were historic, the challenge was and continues to be product to sell.

What matters is after the turmoil how does the consumer choice of distribution channel emerge. In October, a survey of consumers indicated where the dust settled. Not surprisingly, the iIternet gained ground but independent retailers did as well. Note from Graphic C the winners and losers.

The next important finding will be as we return to normal in 2021 and beyond, where will the consumer preference emerge? But at the end of 2020, this is where the individual retailers stand according to our methodology.

POWER 50–METHODOLOGY

Market share is the most heavily weighted factor determining who makes the list, accounting for 46% of the total score. It is determined by dividing the retailer’s estimated sales by the estimated retail sales of furniture and bedding in each of the markets in which the company participates, whether it is a metropolitan statistical area, micro statistical area, or a rural area. Sales of electronics, appliances, and housewares are not included.

To arrive at a list of home furnishings retailers with the strongest online engagement, we measure by 14 separate metrics. Sources include Alexa, Facebook, MOZ, OpenSEO, Twitter, and Pinterest. On Facebook, for example, the number of “check-ins” and “likes” were among the metrics, as were the number of Twitter followers, Pinterest “pins” and GooglePageRank, just to name a few.

From that data, we used a basic ranking methodology, assigning a numerical value to the ranked list of each metric. (For example, the retailer with the highest number of Twitter followers received a “1,” and so on.)

Then, we arrived at 14 individual scores calculated for each metric. After dropping the two highest scores to eliminate any outliers, the statistical average of the 12 remaining scores was used to calculate the final engagement score.

The final factor in the Power 50 ranking is retail expansion, which accounts for 15% of the total score. Using public records, it measured store expansion and expansion into new markets. In addition to the Power 50, HFB compiled separate lists that ranked regional chains, large independents, vertically integrated retailers, and independents with sales of less than $50 million in a single state.

What Sells: The Home Office is Here to Stay

Many consumers are still managing combined spaces, especially with some households having multiple people working from home. When consumers were polled during a FurnitureCore survey and asked the location of their home office, 55.79% said in a room specifically for a home office and 44.21% said their office is in an area of a shared room. As the popularity of standing desks has grown in recent years, Twin Star Home has targeted consumers desiring a more functional home workspace. “As the number of people working from home surged during the pandemic, so did the popularity of standing desks. For consumers who don’t have dedicated offices at home, standing desks are a great solution for providing workspace, especially in blended living spaces. We have been leaning into this category with the launch of many new designs and consumers have been raving about them,” said Lisa Cody, SVP marketing at Twin Star Home.

Offering consumers variety in their home office furniture is the key to success. More than ever, no home office is created the same. Consumer research conducted by FurnitureCore asked consumers what style of desk they preferred for the home office. 27.37% prefer a writing desk, followed by an L shaped desk at 22.1%, an executive desk at 21.75%, a desk with a hutch at 12.28%, a corner desk at 10.88%, and a roll-top and secretary both at 2.81%. After long hours sitting at any type of desk, consumers know the importance of the right chair. When asked what home office furniture have you purchased in the last two years, 50.53% of consumers surveyed said a desk chair.

Based on the FurnitureCore Industry Model developed by Impact Consulting Services, parent company to Home Furnishings Business, research shows that the home office category has increased steadily since 2019, finishing 2020 with $4.74 billion in sales and up from $4.31 billion in 2019. The momentum continues to strengthen with 2021 sales of home office up 33.6% yearto-date over 2020 Q2 YTD. At $2.85 billion in 2021 Q2 YTD, sales are on track to exceed $5 billion this year. Incorporating sustainability into the home office demand, Greenington has found success with its organic line of office furniture. “Home office continues to be a strong category with sustainability increasingly important to consumers,” said Troy Lerew, Greenington VP of sales.

Growing at roughly the same pace as home office, the home entertainment category was up 33.2% by the second quarter of 2021 at $3.44 billion in sales, compared to $2.58 billion in 2020 during the same period. Both furniture categories increased by 6.5% from 2021 Q1 to 2021 Q2. Just as important as carving out the perfect home office, is creating a place to unwind after that day at work with the latest in home entertainment.

Statistically Speaking: Rising Trade Costs: How High Will they Go?

Drops in imports and exports began in 2019 partly as a result of “tariff wars” with China and declined further during the first half of 2020 due to pandemic shutdowns. Once factories reopened, a surge in demand overwhelmed an already stressed supply chain causing price hikes of imported goods, increased duties/tariffs and soaring freight costs. Pre-pandemic, many companies turned to manufacturing in Vietnam to combat China’s tariffs and that has only increased, despite Vietnam’s problems keeping factories open with employees fleeing to home villages. In 2021, high container costs and shipping delays have furniture companies looking closer at Mexico as a viable option in these uncertain times. This article updates article Statistically Speaking’s Sept/Oct 2020 Pandemic Slows Flow of International Goods.

 

After a rocky year, U.S. furniture imports finished 2020 at $30.7 billion wholesale – 3.1% up from 2019 (Tables A and B). At $26.8 billion in August 2021 and four months of data to go in the year, import dollars will far exceed 2020 and likely be much higher than peak imports of 2018. Both imports and exports plummeted in 2019, 6.1% and 3.9% respectively, with tariff wars raging. During 2020, exports tanked even further, dropping 10.9%. Although not up to pre-pandemic levels, U.S export dollars were $2.4 billion as of August—up 25.1% from $1.9 billion in August of 2020.

 

Cost to Import Goods
The customs value is the price of the imported goods and does not include additional duties and tariffs, nor insurance & freight. Historically the add-ons have been small compared to the customs value. In recent years, tariff wars have ushered in high duties from China and more recently the exorbitant freight costs. As shown in Table C, duties and tariffs shot up 124.7% in 2018 and 183.1% in 2019. Initially, customs value and insurance and freight dropped in 2019 and 2020. Now with such high demand and supply chain difficulties, freight charges are up 85.5% (2021 Aug YTD) and the total cost of imported goods has increased 38.3% from 2020.

In 2017, add-ons of duties and tariffs, as well as insurance and freight charges, totaled only 7.7% of the cost of importing. This year August year-to-date, the add-ons reached 16.1% (Table D).

Duties and tariffs are part of the total cost of goods, but levied based on the total general customs value and exclusive of freight and insurance. Duties and tariffs stayed steady at 1.1% of customs value from 2015 to 2017 before beginning the climb of 2.2% in 2018 and ultimately to 8.0% by August year-to-date (Table E).

Over 97% of the duties and tariffs the U.S. pays to other countries to import products is to China. This year, August year-to-date, China represents 36.1% of all U.S. imports, but 97.1% of all duties and tariffs the U.S. pays. China receives an additional 21.5% of its customs value in additional duties and tariffs (Figure 1).

In addition to high duties from China, freight costs have skyrocketed globally in 2021. As of October 7, 2021, inbound spot freight rates from Shanghai to Los Angeles were up 175% over last year and up 210% from Shanghai to New York. Outbound was not much better – up 155% from Los Angeles to Shanghai and 103% from New York to Rotterdam (Figure 2). While the pandemic has been the catalyst to the supply chain explosion, most economists agree the shipping industry has been running at full capacity with no margin for error for a long time. The well-publicized chaos in international shipping, a major contributor to higher prices and rising inflation, is predicted to last well into 2022.

Household Furniture Growth Exceeds Office and Institutional
All furniture industry imports – household, office and institutional – dropped in 2019. Then due to the post-COVIDshutdown surge in demand in the second half of 2020, imports began to increase again before exploding in 2021. U.S. imports of household furniture (excluding mattresses) was up 54.4% as of August year-to-date, followed by institutional furniture at 34.9% and office furniture at an 18.6% increase over 2020 (Table F). Among household furniture categories, the demand and value of upholstery skyrocketed in 2021 – up 77.2% in August year-todate. Nonupholstered wood furniture increased by 48.9%, followed by metal furniture at 41.9% and all other household furniture categories at 40.7% (Table G).

As shown in Table H, the product mix for imported household furniture has changed very little over the last five years. Upholstery stumbled during the pandemic but made up for it in 2021, accounting for 32.4% of imported household furniture by August. With the exception of mattresses, imports of all furniture categories increased from 2020 August YTD to 2021 Aug YTD (Figure 3).

Imports by Country
Of the 161 countries shipping household and institutional furniture to the U.S. this year, four countries control 76.9% of imports with China leading the pack at 38.7% in 2021 August yearto-date (Table I). As recently as 2018, China controlled 57.9% and the percentage has fallen each year. Noted previously, tariff wars beginning in 2019 spurred U.S. companies to move operations to Vietnam, which has grown from 13.6% of imports in 2018 to 28.6% this year despite the factory shutdowns that plagued the country during the summer and into the fall of this year.

As shown in Figures 4 and 5, Vietnam is seeing the highest growth from U.S. furniture imports at $7.7 billion this year through August — up 76.3% from the same period of 2020. In reaction to the exorbitant freight costs, more companies are turning to Mexico for their manufacturing needs. Proximity has become a huge appeal and being able to develop product from Mexico is an advantage during supply chain uncertainty. At $1.5 billion in U.S. furniture imports, Mexico is on track to exceed pre-pandemic levels and is up 46.4% over the first eight months of 2020.

Among major furniture categories, upholstery is the biggest contributor to Mexico’s jump in U.S. furniture imports, increasing by 114.7% over the past year. However, Vietnam still accounts for 43.8% of product category sales and is also up over 110%. Vietnam also accounts for the vast majority (50.2%) of nonupholstered wood household furniture. China still leads the way in metal, household furniture (except wood and metal), institutional furniture and office furniture (Figure 6).

While the shipping crisis is ongoing, product keeps flowing in. But many believe there is a reckoning coming, especially in the U.S. John Porcari, the port envoy to the Biden-Harris Administration Supply Chain Disruptions Task Force, is quoted as saying, “We’re living on our grandparents’ investments. As global commerce increased, as the e-commerce economy increased, we haven’t made infrastructure investments keep up.”

Editor's Note: Moving From Static to Dynamic

Merchandisers did not realize how much of their activities were a product of memory muscle. Markets in January, April, August and October preceded a review of product sales rate for the best sellers that were slow to change.

Now welcome to dynamic merchandising, where best sellers change monthly based upon supply and the concept of “nailing down the floor” is an objective not a cardinal rule. Now more than ever, there is a need for constantly updated analytics, given the increase in price of product and transportation. For the traditional retailers, the promotional price points have been all but eliminated. For the upholstery/stationary/sofa-love/ fabric category the percentage of units sold has declined 50% (21.6% - 10.49%). The graphic below presents Q1/Q2 2021.

Unfortunately, the value retailers (Home Depot, Target) have maintained this price point with ready-to-assembly. The current fluctuation in supply has caused a continuing change in top sellers. What was number 31 in the second quarter is now number one. Monitoring this fluctuation is critical. Trying not to let merchandising become “what you can get” from a well curated merchandise lineup is the challenge. Once you train yourself to this more dynamic process, there are benefits. But now the challenge.

Cover Story: STATE OF THE INDUSTRY: 2022 FURNITURE INDUSTRY FORECAST A Time Before the Storm?

From a quarterly perspective, the pandemic shutdown was just a “shutter” that impacted the end of March and April with a significant rebound in May and June.

Now this year, as we write, the industry has just completed quarter two with a mind blowing 35.6% in sales over the same quarter last year – scoring a 25.02% increase for the past 12 months (July 20 – June 21). Should we be optimistic or pessimistic?

While the industry will continue to grow, there will be the haves and have nots in the distribution channels. The first challenge that furniture retailers face is e-commerce. During the initial quarter of the pandemic and forced with mandatory shutdowns in many areas, brick and mortar sales declined. The focal point of this shift in market share is Wayfair increasing sales by 56% from $9 billion to $14 billion with repeat, continued orders, representing 76% of total volume. However, this volume is focused in the total home furnishings category, not just furniture and bedding.

While growth may continue, the consumer is being attracted to other distribution channels that offer different retail experiences and product value. The recipient of the growth is obviously e-commerce, but value retailers such as Big Lots and manufacturer verticals such as La-ZBoy, Ashley HomeStores, and Bassett can also control their supply channels. Graphic B presents the current estimate of distribution channels.

From a financial perspective, traditional furniture stores are in a significantly improved position. Traditional stores moved from a prepandemic breakeven point at 90% of current sales to 76% of current sales twelve months after the pandemic quarter. The specifics are presented in Figure 1. This cushion provides some assurances from a downturn.

However, while sales were up 24% for this composite group, sales for their market footprint were up 35.6%, resulting in a market share loss of 11.3 points. Therefore, a positive financial position could become significantly negative with a return to more historical consumer demand levels. Also, the contribution margin levels have increased significantly, driven by increased gross profits and a decrease in certain expenses such as advertising.

The industry has survived many downturns in the past 40 years. Whether it is inflation, a consumer confidence crisis, stock market crash or financial meltdown, we have persevered. However, with this crisis there has not been a downturn. Graphics C and D compare consumer price index (CPI) and consumer expenditure ($/Households).

But what if the consumer recognized the value of furniture and appreciated what a beautiful home added to their life? Graphic E presents the forecast.

Welcome to a $2 billion dollar industry. We can dream. And now to the forecast.

U.S. Economy Forecast to Proceed Cautiously with A Bit of Optimism

Much of Home Furnishings Business’ Economic Forecast hangs on containing the COVID-19 variants not just in the U.S., but internationally, where supply chain disruptions impact everything from consumer products to the construction industry. Figure 1 summarizes the forecast.

The Furniture Industry

This year’s growth in the furniture industry appears misleading on paper as it is compared to 2020 with partial shutdowns during the pandemic and a subsequent consumer spending spree on furniture, home furnishings and housing. When the dust settles, 2021 should finish 18.8% up and 2022 forecast at 5.9%.

By the end of 2022 the furniture and bedding industry should total over $160 billion.

Distribution Channels. The pandemic threw retail distribution channels into a tailspin with much of sales performance based on which retailers faced mandatory shutdowns. Figure 3 shows growth yearover-year 2019 through 2022 forecast, sorted by second quarter growth this year. Department stores suffered the most during the pandemic and subsequently in Q2 this year posted the highest gains. Furniture and home furnishing stores also performed well, with furniture stores gaining 67.7% compared to Q2 of 2020. Electronic shopping, one of several distribution channels that had to play by the fewest government rules, experienced growth early in the pandemic, with second quarter sales posting only 9.4% increases when compared against the same quarter of 2021. The dollar volume gained by electronic shopping internet companies is reflected in Figure 4 and shows that while growth has slowed in the second quarter, it will still well exceed 2020 numbers of $836.7 billion. Prime Furniture Buying Population.

Important to the furniture industry is the further decline in the 45 to 55 population, which historically spends the highest dollars per household. Despite their spending, in recent years these GenZs are one of the lowest cohorts in the furniture buying population. Recently released Census Bureau total population estimates show that from July 1, 2019 to July 1, 2020, the nation grew by just 0.35%. This is the lowest annual growth rate since at least 1900. The Census Bureau will revise its projections in the future (last projections by age in 2017) to reflect the effects of the pandemic. U.S. COVID-related deaths among people over 65 coupled with a low pregnancy rate and stymied immigration during the pandemic, put an asterisk next to population projections. According to the CDC, 40,000 fewer babies were born in the second half of 2020 than would normally occur.

For the furniture industry, the continued economic pressures on Millennials pouring into the 35 to 44 age group, further exacerbated by the pandemic, is of concern. Federal studentloan debt payments are set to resume this fall, coupled with possible higher interest rates. It matters less that a segment of the prime furniture buying population is increasing in numbers if financial woes constantly override the growth.

Meanwhile Baby Boomers continue to age out of the prime furniture buying population.

The Economy

Gross Domestic Product (GDP). During the second quarter of 2020 GDP fell 31.2%, but quickly rebounded with 33.8% growth in the third quarter. Growth this year through the second quarter ranges from 6.3% to 6.5%.

 

This year GDP is expected to average around 6.5%, but slow significantly in 2022 to 3.3% according to the Federal Open Market Committee (FOMC). Payroll Employment. According to the Bureau of Labor Statistics (BLS), the substantial shock to the U.S. labor market caused by the pandemic has resulted in the BLS projections program designing two alternate scenarios to estimate some of the long-term structural labor market changes that could result from the pandemic. For now, payroll employment is expected to grow 3% in 2021 and slow to 2.2% growth in 2022.

Unemployment Rate. Economists differ significantly on the forecast for the unemployment rate, especially next year. Most see this year ending around 5.6% unemployment with 2022 falling to 4.5%.

Consumer Prices (Inflation).

Furniture prices began to increase starting in August 2020 after falling during the worst of the pandemic. In the second quarter prices took off increasing 8.3% but are expected to slow compared to the third and fourth quarters of last year. For the first half of this year, prices have increased 5.1% over 2020 and should finish the year at about a 7% growth. Given the continued supply chain disruptions for the furniture industry, 2022 furniture prices are forecast to grow another 5.5%.

Dow Jones Industrial Average.

The stock market ignored pandemic bad news in 2020 and ended the year at record highs. In the second quarter this year, the Dow Jones Industrial Average ended at 34,503 and most economists expect the trend to continue through the second half of this year and take off again in 2022. However, a Morgan Stanley report issued in August reiterated that, “amid hope and excitement that the pandemic might soon be behind, investors may actually find it tougher to generate the kind of stock market returns we saw last year in the midst of COVID-19.”

Gasoline Prices. While gasoline prices have increased to an average of $2.97 for a gallon of regular in the second quarter of this year. Prices are expected to moderate slightly in the second half of this year and again in 2022. For this year, a gallon of regular is forecast to average $2.82, or 37% above 2020.

Consumer Confidence.

America’s confidence level exceeded an index of 100 (1985=100) last March, the first time in a year, when the index grew to 109 (Source: Conference Board). Confidence steadily increased until this August, when it fell for the first time from 125.1 in July to 113.8 as the Delta variant became more widespread. Increased confidence depends in large part on how quickly the Delta variant is brought under control as well as how employment confidence grows as unemployment benefits and federal stimulus packages come to an end.

For the second quarter of this year, consumer confidence averaged 121.2, before declining in August. Prime Interest Rate. Despite economic uncertainty, most economists believe the prime rate will hold throughout 2021 at 3.25% before rising later in 2022 to 3.5%. Mortgage Interest Rates. Interest rates are expected to remain low for the remainder of the year before rising next year. The 30-Year rate is forecast to end 2021 at 3.1% and grow to 3.7% in 2022. The 5/1-Year Hybrid Adjustable rate should stay under 3% until next year.

The Housing Market Housing Sales.

Existing home sales took off in the first quarter of this year and increased 33% in Q2 compared to COVID-depressed sales in 2020. Meanwhile new home sales were strong during the 2020 pandemic and continued through the first quarter of this year. However, inventories were depleted in Q2 as new homes that would typically have started construction during the pandemic, slowed to a sales crawl of 2.8% growth. Home sales are expected to moderate the second half of this year. In 2022 existing home sales are forecast to be flat, and new construction should boost new home sales by 15.6%. Housing Starts. New construction jumped over 40% for both single and multi-family units in the second quarter of this year compared to 2020 when COVID disrupted the construction industry. Housing starts should remain level in number through the second half 2021 and increase in 2022 for single family units by 8.7% and decline for multi-family units by 3.6%. Housing Prices. The much-publicized increase in housing prices this year has stirred fears of another housing crash. However, according to a report issued by the Conference Board, US Housing: Boom- Bust Redux?, “Supply and demand factors—not speculation, predatory lending and/or bad underwriting practices—are at the root of the latest home price upswing.” This year existing home prices are forecast to be up 14.1% and new home prices 10.2%. Prices should level off to more normal growth in 2022.

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