Skip to main content

If Housing Is Rebounding Can Floor Covering Sales Be Far Behind?

Stuart Hirschhorn
FLOOR COVERING STATISTICAL TRENDS AND OUTLOOK - Housing Data

Something happened on the way to the predicted double-dip recession that was to be caused by the European debt crisis and the paralysis in Washington- the housing market showed strong gains and specialty floor coverings store sales turned upwards.  These trends can be seen in the following reports.

• According to the Department of Commerce (http://www.census.gov/const/newresconst.pdf), housing permits increased by 6.5% and starts rose by 5.5% in the third quarter of 2011.  In October, these gains accelerated, growing 17.7% and 18.9%, respectively.

• Existing home sales increased at even sharper rates.  According to the National Association of Realtors  existing home sales increased by 17.8% in the third quarter of 2011 and by 11.7% in October.(http://www.realtor.org/research/research/ehsdata)
• Floor covering store sales also began to rebound as housing demand increased.  Commerce reported that specialty floor covering store sales increased by 1.2% in the third quarter after declining 7.9% in the first half of the year.  Sales are estimated to have increased by 3.4% in October, based on preliminary Commerce data.  Positive specialty floor covering store sales are not a surprise, since floor covering sales are highly correlated with housing demand.  This has been seen in the findings of the Catalina Floor Coverings Quarterly Update. (http://www.informationgiant.com/www/index.cfm?action=catalog.browse&category=Floor%20Coverings%20Quarterly%20Update&id_category=06a50ffa-04c4-4f6b-9dda-c14d67bd2247).

Considering the uncertainties of the economic environment and the low level of consumer confidence, it would seem unlikely the housing data would be so strong.  So why are we seeing such positive housing data?

•  Can it be that consumers consider housing prices low enough after declining by 26% over the last five years?  They are also reacting to historic low mortgage rates.

• Can it be that consumers are “acting” more confident as initial unemployment claims fall and employment increases?  After increasing at a 0.4% rate over the first three quarters of 2011, U.S. employment levels increased by 0.9% in October 2011.

• Can it be that we are finally seeing the peak of our housing woes?   A recent Wall Street Journal  (WSJ)article indicates that “the share of households delinquent on their mortgage payments has fallen to the lowest level since the end of 2008.” according to the Mortgage Bankers Association. (http://online.wsj.com/article/SB10001424052970204517204577044401122300024.htm)

Now that we are seeing an upward trend in U.S. housing demand, the question now is how sustainable are these trends?  I think we could see continued gains in the housing market, since the lack of Congressional action on the budget results in neither a cut in spending or an increase in taxes.  So we may see stronger floor covering sales for 2012.  However, all bets are off for 2013 if the automatic cut in spending and increase in taxes (a total of $4.9 trillion over ten years) goes into effect.

What do you think?
Stuart

Stuart Hirschhorn is a member of the Floor Covering Institute and Director of Research of Catalina Research, Inc. which provides in-depth market research on the floor covering industry.

Comments

Popular posts from this blog

Concrete Moisture Leading to Flooring Failures - Is this an Epidemic?

Sheet vinyl  lifting off concrete substrates that looks like blistered skin from a burn, wood flooring turning up at the edges, carpet tiles emitting foul odors from reactions with “wet” slabs.  All of these failures in floor covering occur daily around the country plaguing flooring contractors and end users.  Is this a flooring conspiracy or something more sinister?  Well, it’s not a conspiracy, nothing so colorful as that, and it’s not sinister unless you consider that moisture lurking in the substrates is skulking around waiting to pounce. What are the reasons for this outbreak of flooring failures?  Have adhesives changed?  Is flooring material different?  Hasn’t concrete been the same for years?  Why is this all happening now? Adhesives have changed from when solvent carriers were used but adhesives are actually better now.  Flooring products have changed with the onslaught of non-permeable backings which can trap moisture vapor emissions coming from concrete.  Concrete hasn’t

Intelligent merchandising in the floor covering showroom

Donato Pompo In a ceramic tile and stone showroom the two biggest challenges for customers are  visualizing how the tile or combination of tiles will look installed in the home and determining which tiles are suitable for their intended application. Figuring out how to address these two challenges should be a priority for every showroom. Along with that, conveying the features, benefits and limitations of the products is the next challenge. And perhaps the most important piece of the showroom puzzle, is to train sales people so they are knowledgeable and competent showroom consultants (I wrote about this previously on the blog in, How Training and E-learning Can Improve ROI ).   Years ago, when I was an importer and distributor with several showrooms I coined the term Intelligent Merchandising to represent the approach we developed to help our customers make selections and our sales people more effective in assisting our customers during the selection process. The challeng

Will Chinese Drywall VOC Issue Affect Flooring?

Chinese drywall shares commonalities with flooring, particularly as it relates to VOCs. If you’re new to the flooring industry you may be surprised to learn that last decade it was necessary for the Consumer Product Safety Commission (CPSC) and the Environmental Protection Agency (EPA) to anoint carpet as a safe product . The proclamation was due to flawed tests perpetrated against the carpet industry by Anderson Laboratories . But the issue isn’t dead if you search the Internet. There are still sites that support Anderson Labs. Even a "green" industry site writes “ A rash of alleged health problems with carpet have yet to be properly explained, suggesting that all carpets, and especially the less expensive synthetics, should be used with great caution .” The drywall industry is going through a similar experience. Two major differences: 1. They’ve pinpointed it to some drywall made in China. 2. It’s true and real, and no one is suggested it isn’t destroying homes and p