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Factoids

Factoids offer brief snapshots of current topics pertinent to the Furniture industry based on our on-going research. Increase your grasp of current trends, consumer attitudes, and shifts within the industry through solid statistics and concise insight.

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Factoids

Revised Growth in Furniture Consumer Spending 2010 to 2018

Consumer spending on furniture increased 7 percent last year outpacing the growth of all other broad home furnishings goods categories with sales of $114.6 billion in sales. Despite promising growth, all home furnishings goods continue to lose consumer dollars to spending on services including healthcare, rents and mortgages. This is the first factoid in a series of five factoids detailing consumer spending across all spending categories in 2018.

Overall, personal consumption expenditures have risen 41.6 percent post-recession with the majority of consumer spending – roughly two-thirds – absorbed by services and the amount increases every year. According to the government’s Bureau of Economic Analysis (BEA), Healthcare costs now surpass total housing expenditures at $3.10 trillion versus $2.98 trillion in 2018. Combined healthcare and housing consume much of America’s paychecks. Although services will continue to eat away at consumer dollars with rising housing rents and mortgages, overall consumers are confident in the economy. Spending on durable goods is on the rise and has increased by 44 percent since 2009.

A comprehensive historical revision to Consumer Spending statistics in the second half of last year by the BEA confirmed what many furniture retailers tried to tell us all along. Specifically, that growth in Furniture spending coming out of the Recession ending in 2009 was not as robust has first published. The Bureau of Economic Analysis lowered estimates of Furniture spending beginning in 2011 and which has cumulated to an 8 percent correction that has carried through 2018.

Source: Personal Consumption Expenditures, Bureau of Labor Statistics
*seasonally adjusted at annual rates (SAAR)

The Changing Profile of Renter vs. Owner Percent of Owner and Renter Occupied Housing Units in 2017 by Year Structure Built

For many in pursuit of homeownership and those already there, the Great Recession forced the American tradition of owning a home aside and renting became the viable alternative. Now safely out of the recession, many renters are choosing to stay put or better yet, keep the freedom to move. This is the final factoid in a series of five factoids, using data from the U.S. Census Bureau’s 2017 American Community Survey, to explore the changing profiles of owners and renters. 

Not only is limited new housing construction stifling potential home buyers, the aging of current housing could pose a problem in the years to come. The housing industry is facing a future where over half of all owner and renter occupied units are approaching 40 years old. Between 2000 and 2009 new housing construction began to diminish and completely stall due to the market crash. Although renter-occupied units were in high demand during and after the Great Recession, apartment construction failed to pick up and was only 10.9 percent of all units during the same time period. Since the recession ended in 2009, only 5.1 percent of all owner-occupied homes and 5.6 percent of all renter units have been newly built.

The combination of Millennials slow to form households (renting or buying) and Boomers aging rapidly has significant implications on the furniture industry going forward. With the job market improvements, it appears that though they have a lot of catching up to do, Millennials are poised to make their mark on the home furnishings industry just as the Baby Boomers will be lessening their hold over the next 10 years. There are some signs many will retreat to the suburbs like their parents to own homes and raise families. Others, whether or not they delay marriage, have grown to like the freedom and convenience of apartment living and are a growing segment. Both groups will challenge the marketing efforts of retailers in the future.

Source: U.S. Census Bureau, 2017 American Community Survey 1-year estimates

Owner vs. Renter Occupied Housing Units

For many in pursuit of homeownership and those already there, the Great Recession forced the American tradition of owning a home aside and renting became the viable alternative. Now safely out of the recession, many renters are choosing to stay put or better yet, keep the freedom to move. This is the fourth factoid in a series of five factoids, using data from the U.S. Census Bureau’s 2017 American Community Survey, to explore the changing profiles of owners and renters. 

As would be expected, families contribute to the higher average number of occupants in owner-occupied households, but the difference is not significant compared to renter units. Owner-occupied units in 2017 had an average household size of 2.72 persons, while renters had a household size of 2.51. As more single people have turned to renting, the majority of homeownership is narrowing to mainly families. 

Renter households have a greater tendency to contain only one occupant compared to owner-occupied units, 37.1 percent of renters versus 22.7 percent of owners. But over 35 percent of both renter and owner owned units have three or more occupants.

One of the biggest differences in renter and owner households is that owner-owned residences are primarily married couple families, 60.1 percent compared to 27 percent of renter housing. Likewise, almost half (48.2 percent) of renter households are nonfamily and unrelated individuals compared to only 26.8 percent of owner residences. 

Source: U.S. Census Bureau, 2017 American Community Survey 1-year estimates 

The Changing Profile of Renter vs. Owner : Owner and Renter Occupied Housing Units Householders Ages 25 and Over Percent by Age Group

For many in pursuit of homeownership and those already there, the Great Recession forced the American tradition of owning a home aside and renting became the viable alternative. Now safely out of the recession, many renters are choosing to stay put or better yet, keep the freedom to move. This is the third factoid in a series of five factoids, using data from the U.S. Census Bureau’s 2017 American Community Survey, to explore the changing profiles of owners and renters. 

As expected, renter-occupied housing leans toward younger age groups with 8.6 of all renters under the age of 25. This includes many rentals across college campuses and young adults just starting out. Discounting these young renters and looking only at the over 25 age groups, apartment rentals are increasingly growing into a broader mix of old and young. For households age 25 years and older in 2017, about half of all renters were age 45 and over. This compares to 75 percent of owner-occupied housing. 

Source: U.S. Census Bureau, 2017 American Community Survey 1-year estimates   

The Changing Profile of Renter vs. Owner Household Formation

For many in pursuit of homeownership and those already there, the Great Recession forced the American tradition of owning a home aside and renting became the viable alternative. Now safely out of the recession, many renters are choosing to stay put or better yet, keep the freedom to move. This is the second factoid in a series of five factoids, using data from the U.S. Census Bureau’s 2017 American Community Survey, to explore the changing profiles of owners and renters. 

With a large portion of the population aging to 65 and over, American household demographics have shifted in the seven years, 2010 to 2017, since the last recession. The 65-plus age range now comprises over 25 percent of households in the United States. Ages 25 to 64, that made up 75 percent of households in 2010, have dropped to 70.8 percent in 2017. 

Total household formations increased only 4.8 percent since 2010 as Millennials have been slow to enter the housing market, either as renters or owners. At the same time, as Baby Boomers have poured into the older age groups, the 65 and over group jumped 23.4 percent. Household formations for ages 25 to 44 slowed to a negative growth down 1.0 percent from 2010 to 2017, while ages 45 to 64 increased slightly by 1.4 percent. 

For the furniture and home furnishings industry, as the Baby Boomers continue to age, their purchasing power will lessen significantly over the next 10 years. Not surprisingly, ages 45 to 64 had the highest median household income at $72,443 in 2017, while ages 25 to 44 is 9 percent less at $65,879. The aging Boomers over 65 had median household incomes of $43,735.

The Changing Profile of Renter vs. Owner Households

For many in pursuit of homeownership and those already there, the Great Recession forced the American tradition of owning a home aside and renting became the viable alternative. Now safely out of the recession, many renters are choosing to stay put or better yet, keep the freedom to move. This is the first factoid in a series of five factoids, using data from the U.S. Census Bureau’s 2017 American Community Survey, to explore the changing profiles of owners and renters.

Renter-occupied housing is at its highest level in almost 50 years (36.2 percent of households) and up 9.3 percent 2010 to 2017. This compares to owner-occupied housing only increasing by 2.4 percent.

According to an October 2018 survey from Freddie Mac, 78 percent of renters believe renting is more affordable than owning. Across all generations, reasons for renting include housing shortages, rising home prices, remaining fear after the market crash, ability to pick up and move and a desire to live closer to work.

Comparing the change in number of owner-occupied units to renter-occupied units over seven years, renter households went from 34.6 percent of total housing units to 36.1 percent - increasing 3.7 million units from 39.7 million to 43.4 million households.

Industry Sales by Quarter2012 Q1 to 2019 Q1 Bedding Industry

After a rocky 2018 for the Bedding industry that saw consolidation, increased internet presence and an onslaught of imports, the year ended with growth up less than 1 percent (0.8 percent). Initial first quarter estimates of $4.05 billion put 2019 Q1 sales up 1.5 percent over 2018 Q1. Compared to the previous fourth quarter of 2018, sales rebounded 15.6 percent reflecting both Bedding’s seasonality and hopefully a righting of the ship.

Bedding has struggled the last 8 quarters, and growth continues to be slow quarter over quarter.  The first quarter of this year grew 1.5 percent over the same quarter 1 in 2018. 

First quarter 2018 Bedding sales totaled $4.05 billion, up 1.5 percent over the same period last year. 

Source:  Impact Consulting Services, Inc. industry model  2017 industry sales have been revised. 2018 q1 is preliminary.

Industry Sales by Quarter 2012 Q1 to 2019 Q1 Furniture & Bedding

Following high growth in the third and fourth quarters of last year, the fourth quarter softened and continued to soften into the first quarter of this year. Combined Furniture and Bedding sales grew only 1.8 percent in the first quarter versus the same quarter in 2018. Compared to the previous quarter, 2018 Q4, first quarter sales were down 3.2 percent totaling $25.92 billion.

Furniture (excluding Bedding) in the first quarter increased 1.86 percent versus the same quarter 1 in 2018 totaling $21.88 billion. Compared to the fourth quarter of 2018, Furniture sales fell 6 percent.

Although Furniture sales typically dip in the first quarter compared to the fourth quarter of the previous year, Bedding sales tend to increase. After a poor fourth quarter last year, Bedding sales were up 15.6 percent over 2018 Q4, totaling $4.05 billion. Compared to the same quarter last year, 2019 Q1 sales increased only 1.5 percent.

Following high growth in the third and fourth quarters of last year, the fourth quarter softened and continued to soften into the first quarter of this year. Combined Furniture and Bedding sales grew only 1.8 percent in the first quarter versus the same quarter in 2018. Compared to the previous quarter, 2018 Q4, first quarter sales were down 3.2 percent totaling $25.92 billion.

Furniture (excluding Bedding) in the first quarter increased 1.86 percent versus the same quarter 1 in 2018 totaling $21.88 billion. Compared to the fourth quarter of 2018, Furniture sales fell 6 percent.

Although Furniture sales typically dip in the first quarter compared to the fourth quarter of the previous year, Bedding sales tend to increase. After a poor fourth quarter last year, Bedding sales were up 15.6 percent over 2018 Q4, totaling $4.05 billion. Compared to the same quarter last year, 2019 Q1 sales increased only 1.5 percent.

For the second straight quarter, the first quarter in 2019 slowed compared to the same quarter of last year. Furniture and Bedding sales of $25.92 billion reflect an increase of 1.8 percent over 2018 Q1. Compared to the fourth quarter of last year sales are down 3.2 percent.

Furniture (excluding Bedding) increased 1.86 percent in 2019 Q1 versus the same first quarter of 2018 with sales of $21.88 billion. This figure is down 6 percent over last quarter, 2018 Q4.

Coming off a tough 2018, where sales for the year increased less than one percent (.08 percent), Bedding rebounded slightly in 2019 Q1, up 1.5 percent to $4.05 billion. Compared to a poor fourth quarter of last year, sales were up 15.6 percent in the first quarter of this year.

Millennials Gain Share of Consumer Spending Age and Size of Household by Generation

As Baby Boomers continue to age out of prime furniture buying years, Generation X households have held strong in their power as key contributors to consumer spending – despite a much smaller population size. A more affluent Generation X population paired with the sheer size of Millennials, now fully in adulthood, points to a bright future for the furniture and home furnishings industry. In 2017, Millennials accounted for 71.9 million people and are expected to surpass Baby Boomers size of 73.5 million next year.

This is the final factoid in a series of four factoids, using data from the U.S. Bureau of Labor Statistics’ 2017 Consumer Expenditure Survey to show the shift over the last four years in consumer spending among the five adult generations as Millennials continue to gain a greater share.

With the highest income and an average age of 44.3, Gen Xers are the industry’s prime consumers. Now an average age of 60.2, many Baby Boomers have retired or are preparing to retire, while the average Millennial is yet to reach 30 with many earning years ahead. In fact, Millennials have now surpassed Gen Xers in the number of individuals in the U.S. workforce.

Generation X represents the bulk of families with children. In 2017, they had an average of 3.1 people per household, slightly down from the 3.2 of the three previous years but still well above the 2.5 for all consumer units. Millennials are starting to have children at a higher pace – bumping up the average size of a Millennial household to 2.6. Baby Boomers still have an average of 2.2 persons per household, possibly reflecting leftover Millennials still at home for younger Boomers.

Millennials Gain Share of Consumer Spending Income by Generation

This is the third factoid in a series of four factoids, using data from the U.S. Bureau of Labor Statistics’ 2017 Consumer Expenditure Survey to show the shift over the last four years in consumer spending among the five adult generations as Millennials continue to gain a greater share.

The Consumer Expenditure Survey estimates mean/average consumer unit income per generation, as opposed to median income. Gen Xers have experienced the highest average income (before taxes) over the last four years – topping at $95,168 per household in 2016, the highest mean household income of any generation in history. Even with a slight dip from 2016 to $95,032 in 2017, average income for Generation X has increased 12.8 percent since 2014. Although Millennial households earned, on average, 54.2 percent less than Generation X and 28.1 percent less than Baby Boomers in 2017, average income among Millennials has increased 21.1 percent over the last four years and will continue to increase as younger Millennials enter the workforce and form households.

Although the Baby Boomer and Generation X households still earn considerably more than Millennials, the percent of total U.S. income is shifting each year in a positive direction for Millennials compared to older generations. Since 2015, Generation X has decreased its share of total income alongside Baby Boomers, while Millennials continue to grow. Income from Millennials now account for 21 percent of total U.S. income compared to 16.2 percent in 2014.

Source: Bureau of Labor Statistics, Consumer Expenditure Survey 2017
*Includes income from all sources  - wages, government subsidies, social security, pensions etc.

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