In Furniture & Home Renovations: Deep Dive Into a Potential Recovery in 2025, a research report authored by Phillip Blee, CPA, discusses expectations that the fourth quarter represented an inflection point and provides an outlook for 2025. Some key themes covered include the housing market, tariffs, product trends, recovery from natural disasters, a consumer survey on planned spending and purchasing behaviors, and updated stock thoughts.
In 2024, the furniture and home improvement market was expected to normalize by midyear and deliver growth in the second half. However, delays in planned interest rate cuts and 30-year lows in existing home sales kept demand soft through the first three quarters, pushing recovery expectations to mid-2025. The industry found its footing in the fourth quarter, with positive demand for furniture and home renovations and increased existing home sales for the first time in 13 quarters. Conversations with private and public companies revealed slight improvements in October, which accelerated after the election and remained consistent through January.
Consumers are adapting to the new normal, with a significant increase in the percentage of people planning to move in the near to medium term. Those who cannot move are improving their existing homes, whether with new furniture or home upgrades. However, tariffs remain a wild card that could lead to a “defer and wait” mentality among consumers due to fears of inflation and rising interest rates.
The industry is expected to grow by 5.5% in 2025, assuming existing home sales increase by 3.7% year-over-year and deflation stays in the 1% to 2% range. The recovery may be choppy, with promotions driving conversion across all price levels. Growth is likely to be uneven, with scaled specialty brands, discount home stores, and big-box retailers gaining market share while regional and local independents remain pressured.
Overall, the furniture and home improvement market is showing signs of recovery, but the path forward may be uneven and influenced by various factors.
For more information about our consumer research, please contact us or your William Blair representative.