People aren't buying furniture like they used to.
has played a role in the recent home-improvement slowdown. U.S. home prices have risen for five months as of June, and mortgage rates remain above 7%. This lack of affordability means less movement in the housing market and less money left over for furniture purchases.
"We continue to expect the luxury housing market and broader economy to remain challenging throughout fiscal 2023 and into next year as mortgage rates continue to trend at 20-year highs," RH's CEO Gary Friedman said on Thursday's earnings call. Applications for a mortgage to buy a home dropped to a 27-year low last week, according to the Mortgage Bankers Association. Thomas said moving activity is an "important catalyst" for purchasing home goods. "With elevated mortgage rates in low inventory levels, we're not seeing a lot of home purchase activity," he said.Not all furniture retailers have survived the current downtrend in demand. Last month, national furniture chain Mitchell Gold + Bob Williams announced it would shutter operations. "The current economic climate has presented significant challenges to the U.S. furniture industry," the retailer's interim CEO, Chris Moye, wrote in a notice announcing the closures."We are encouraged that incoming orders have trended higher each month through the summer compared to the prior year," Hooker Furnishings CEO Jeremy Hoff said Friday in a statement. Thomas said some broader economic factors may impact the U.S. consumer's "ability and willingness to spend." He pointed to an end of the yearslong pandemic pause of federal student loan repayments as a potential headwind for would-be homebuyers and for overall spending on furniture. Student loans began accruing interest at the start of September, and payments are due beginning in October.When is the last time you bought new furniture?
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