by Sales of new and existing homes will likely depend on further lowering of interest rates in the weeks and months ahead
HIGH POINT — As housing sales drive furniture sales, the industry will be looking for a rebound in housing activity including new construction and existing homes.
Both segments have faltered amid higher interest rate levels have have prevented many people from moving, particularly at a time when some are nearing retirement and thus trying to lower their overall housing costs. That’s the reality for many older people in the market, particularly those who don’t want to trade a lower interest rate for a higher rate.
For young families, the situation is equally daunting, especially with housing prices continuing to rise. In its latest report, the National Association of Realtors said that the median existing-home sales price rose 4% from October 2023 to $407,200, which it said was the 16th consecutive month of year-over-year price gains.
The good news is that there are plenty of available homes on the market, as the inventory of unsold units rose .7% to 1.37 million as of late October, which the NAR said is the equivalent of 4.2 months of supply based on the current rate of sale.
Newly built homes also are in abundance as some 1.3 million residential units were started as of October. While 4% lower than the same period last year, the number of completed homes was up nearly 17% in October, totaling 1.6 million units compared to nearly 1.4 million in October 2023. The increase means movers are likely needing new furniture, which perhaps explained some of the increased spending at retail around the same time.
With roughly just more than 1.3 million homes started each month from June through October, there will be even more homes completed beginning in January through the spring considering it takes an average of seven months to complete a home. Again, people moving into these homes will soon need new furniture, which bodes well for the industry in the year ahead.
At an NAR economic forum event in Boston in early November, NAR Chief Economist Lawrence Yun predicted that existing home sales would rise 9% year over year and that new home sales would rise about 11% next year. His forecast for 2026 is that existing home sales would rise 13% year over year and that new home sales will rise 8%.
Citing several predictions from Zillow in a report from Business Insider, existing home sales in 2025 are expected to rise to 4.3 million, up from 4 million this year, while home prices could rise by 2.6% during the same period. The Business Insider report also cited Zillow as predicting that smaller home sales will continue to rise, a trend also reported by Home News Now.
Of course movement in the market will largely depend on interest rates along with other economic factors including the likely tariffs that president-elect Trump is planning to impose.
While much of the home selling activity will spur some furniture purchasing, it’s unclear to what degree it will move the needle at retail. As one source noted during the recent Interwoven show, it will take much more than the recent two months of retail sales gains to undo the damage from the month-over-month declines seen in the previous year and a half.
Nonetheless, it behooves the industry to be prepared amid this possible economic rebound spurred by the housing market. Other factors too will be worth noting such as overall consumer confidence, state and local unemployment, business growth in the local and regional market and of course the impact this has on residential development in and outside one’s community.
Also worth noting? The size and types of homes that are being built, which should dictate the type of furniture people will purchase.
Most retailers position themselves in highly trafficked and highly visible areas in their respective regions, as part of a strategy to capture much of the traffic that’s passing by each day. It’s just part of a commonsense approach defined by having the best location possible.
But those looking to gain market share in their communities will also benefit through their knowledge of the broader economic trends in their areas, not the least of which is housing and related business growth, whichever one comes first. Those trends, not to mention your response to challenges ranging from residential damage from devastating storms to mass layoffs will help determine the success of your business.
And we hope to hear of your successes in the year ahead and beyond no matter what the circumstance. Feel free to share your stories with us by contacting Tom Russell at tom@homenewsnow.com or Ray Allegrezza at ray@homenewsnow.com.
