Housing Industry Dilemma Furniture and Housing Indicators
The furniture industry is driven by housing: new household formations, changes of residences of existing households, and replacement or upgraded furniture within existing residences. Unfortunately, critically low inventories and subsequent skyrocketing home prices and rental rates are locking out new home buyers and stymieing moves at a time when the economy is growing and employment is high. This is the first in a series of four factoids detailing the crucial struggle facing the housing market and consequentially the furniture industry.
Fewer homes are being built per household than at almost any time in U.S. history and home construction per household, a decade after the recession bust, remains the lowest level in 60 years of record-keeping. Adding fuel to the flame, the housing industry is not able to provide the work/lifestyle preferences of ballooning Millennial households nor affordable housing to first-time home buyers.
Since 2010, when the recovery from the recession began in full swing, the furniture industry has been consistent, averaging around 4.7 percent growth. And while the growth in housing starts appears stronger on paper compared to the lackluster growth in new household formations, the actual numbers are about the same, 6.2 million units each over the last five years, not enough to keep up with demand. Building shows signs of picking up based on first quarter starts this year (up 9.3 percent), but economists say this will do little to ease the crisis in many cities.