Demand for furniture and home improvement projects has been volatile over the last few years. Since the COVID-19 pandemic, the industry has seen opportunities and challenges, from the surge in organic demand during the pandemic, the resulting supply chain crisis, or most recently, the drawn-out normalization period amid a more uncertain environment and the worst downturn in the U.S. housing market in nearly 30 years.
Given these moving pieces, William Blair research analyst Phillip Blee contextualizes the status of the furniture and home improvement industry ahead of what we believe to be a very important time.
Recent surveys expect average comparable sales growth of nearly 5% across several industry leaders. While our analysts believe the industry can return to annual growth, we maintain concerns around the industry’s ability to return to a normalized growth rate for the full year in 2025; the impact on the housing market will likely be delayed, given the light nature of existing home sales.
William Blair’s analysts believe consumer demand for home-related spending remains relatively steady with recent lows, despite a decrease in home mobility compared to last year. Still, the consumer’s outlook seems to have marginally improved over the past few months. The furniture and home improvement market should maintain stable growth, barring any major disruptions in the macroenvironment. Our analysts are encouraged by signs of stabilization, and there may be potential for more pricing power. Other key factors include the importance of “the home” due to hybrid work environments.
Additionally, the U.S. housing stock gets older, which requires more maintenance. There is pent-up demand for first-time millennial-age buyers, and the housing shortage has continued to support rising home prices, reassuring owners that renovations provide strong returns. Finally, favorable migration trends in states with stronger returns on home prices support sustainable spending on furniture and home improvements.
For more information about our consumer research, please contact us or your William Blair representative.
Listen to the William Blair Thinking Presents podcast episode: Furniture and Home Renovations: Post-Pandemic Normalization and the Next Era of Growth