Heading into 2025, the furniture industry appears optimistic. However, there are questions about the foundation of this confidence. Suppliers and retailers, particularly retailers, believe that business conditions will improve in the coming year. Much of this optimism is attributed to the end of the election cycle, which they argue has restored consumer confidence and spurred demand. Additionally, some believe a refresh cycle is underway, particularly for upholstery, with consumers needing to replace lower-end items purchased during the pandemic.
Photo: Dreamstime.
However, from this perspective, the optimism may be misplaced. Housing, a key driver of furniture sales, remains weak. Mortgage rates remain high, homebuyer demand is subdued, and the supply of unsold homes is increasing. A recent forecast from Bank of America predicts a modest 2% rise in home prices for 2025, driven by limited inventory. Home-owners, reluctant to sell due to high mortgage rates, are contributing to this trend.
Adding to the challenges, the Federal Reserve recently reduced its projected number of interest rate cuts for 2025. Following this announcement, major U.S. indices experienced significant declines. The uncertainty surrounding tariffs further clouds the outlook. Although no new tariffs have yet been confirmed, there remains considerable political debate over their potential impact. Economists are divided on how tariffs will affect the economy, but there is broad agreement that they could lead to higher prices for consumers, making furniture purchases less attractive.
Finally, and largely anecdotal, many people still appear reluctant to spend freely. In the author's experience, friends and acquaintances remain cautious with their finances, continuing to prioritise savings and restraint. This leaves little confidence in an economic recovery that would benefit furniture sales.
That said, there is hope that the furniture industry could see improvement in 2025. Many industry professionals remain optimistic and hopeful for a return to stronger growth. However, without significant shifts in housing markets, consumer confidence, and tariff impacts, the foundation for this optimism seems tenuous.
Source: www.furnituretoday.com