{"id":1237,"date":"2022-09-20T09:13:54","date_gmt":"2022-09-20T09:13:54","guid":{"rendered":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/2022\/09\/20\/home-goods-retailers-jolted-by-slowdown-in-housing-market\/"},"modified":"2022-09-20T09:13:54","modified_gmt":"2022-09-20T09:13:54","slug":"home-goods-retailers-jolted-by-slowdown-in-housing-market","status":"publish","type":"post","link":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/2022\/09\/20\/home-goods-retailers-jolted-by-slowdown-in-housing-market\/","title":{"rendered":"Home-Goods Retailers Jolted by Slowdown in Housing Market"},"content":{"rendered":"

<\/a><\/p>\n

MARIO TAMA \/ GETTY IMAGES<\/p>\n

<\/p>\n

Falling home sales are rippling through the economy, providing a window into how\u00a0rising interest rates<\/a>\u00a0can cool spending, hiring and growth.<\/p>\n

When people buy new homes, they typically buy a lot to go inside, including furniture, curtains, lighting fixtures and appliances.<\/p>\n

Such spending has slowed or fallen this year as many home buyers moved to the sidelines in the face of climbing interest rates and a\u00a0shortage of homes to buy<\/a>, according to government data and businesses.<\/p>\n

Sales declined in August from a year before by a seasonally adjusted 1.6% at furniture and home-furnishing stores, and by 5.7% at electronics and appliance stores, according to the Commerce Department.<\/p>\n

Furniture businesses have been cutting jobs in recent months, according to the Labor Department.<\/p>\n

\u201cIt\u2019s very bad if you\u2019re involved in the housing market\u201d or a retailer of the kind of products people purchase when they move into a new home, like appliances, said\u00a0Ian Shepherdson, chief economist of Pantheon Macroeconomics. \u201cAll these things are triggered by transaction volumes, and I\u2019m pretty confident that they\u2019re all going to take a pounding,\u201d he said.<\/p>\n

This is bad for the sellers and their employees, but is exactly the domino effect the Federal Reserve expects when it raises borrowing costs\u00a0to combat high inflation<\/a>. The central bank has lifted its benchmark interest rate this year at the fastest pace since the early 1990s and\u00a0is likely to lift it this week<\/a>\u00a0and in coming months to restrain spending, investment and hiring,\u00a0hoping that will slow inflation<\/a>.<\/p>\n

Mortgage rates have soared<\/a>\u00a0in response.\u00a0The average rate on a 30-year fixed-rate mortgage climbed to 6.02% last week, up from 2.86% a year ago, mortgage giant\u00a0Freddie Mac\u00a0reported Thursday.<\/p>\n

U.S. existing home sales<\/a>\u00a0fell in July for the sixth straight month, the longest streak of declines in more than eight years. They dropped 20.2% from a year ago.<\/p>\n

Inflation is proving stubborn so far. Although sales are down, prices for household furnishings and supplies\u2013which includes furniture, bedding, curtains and carpets\u2013rose 1.1% in August from July, the fastest monthly pace since January, and were 10.6% higher than a year before, according to the Labor Department. One exception in the category is appliances: Their prices fell in August from the prior month by the most in nearly two years.<\/p>\n

More prices could decline or rise more slowly if the sales trends continue.<\/p>\n

RH, the high-end furniture seller formerly known as\u00a0Restoration Hardware, said this month that it expected its sales to keep falling at least through January because of housing-market weakness over the next several quarters, the Fed\u2019s anticipated rate increases and the comparison with its record sales in 2021.<\/p>\n

RH said it expected its net revenue to drop by between 15% and 18% in its next quarter, which ends Oct. 29. The company expects a net revenue decline of 3.5% to 5.5% for its 2022 fiscal year, which ends Jan. 28, 2023, compared with a 32% increase last year.<\/p>\n

\u201cPeople keep saying, are we going to be in a recession? We\u2019re in a recession. Anybody who thinks we\u2019re not in a recession is crazy,\u201d RH Chief Executive\u00a0Gary Friedman\u00a0said on a conference call with analysts. \u201cThe housing market is in a recession and it\u2019s just getting started. So it\u2019s probably going to be a difficult 12 to 18 months in our industry.\u201d<\/p>\n

Some of the falling spending on goods related to home sales reflects factors other than the housing market. RH and other home-goods companies such as\u00a0Wayfair\u00a0Inc. and\u00a0Williams-Sonoma\u00a0Inc., owner of Pottery Barn and West Elm,\u00a0have been facing a reversal of fortunes<\/a>\u00a0after the pandemic initially helped fuel increased spending on home furnishings.<\/p>\n

A housing boom started in mid-2020 as buyers scrambled to find homes with more space, which helped drive purchases of items like sofas, rugs and house plants. Many consumers who started staying home more\u2014canceling vacations and avoiding restaurants\u2014saved money and decided to remodel and redecorate. Spending on home furnishings continued to soar through the end of 2021.<\/p>\n

Now, many consumers are tapped out or shifting spending to groceries because of inflation, as well as to services they missed during the pandemic, like dining out. Meanwhile, retailers now have inventory gluts due to delayed orders arriving after the shoppers moved on.<\/p>\n

\u201cFrom when we reopened in 2020 to the end of 2021, business was going crazy good, you were selling everything you had,\u201d said Jared Simon, owner of Simon\u2019s Furniture, Mattresses & Appliances in Franklin, Mass.<\/p>\n

Now, \u201cmost dealers are over-inventoried; our inventory is up 55% from pre-Covid levels,\u201d he said.<\/p>\n

Prices are starting to come down, he said, with manufacturers offering incentives like discounts for customers who buy a whole package of appliances, such as for a new kitchen\u2014a trend he hasn\u2019t seen since 2019.<\/p>\n

Some consumers are trying to wait out the current period of high inflation, high borrowing costs and supply-chain issues. Nick Luczak recently moved to Dallas for a job as a business development associate, and he plans to wait for holiday deals to upgrade some of his appliances like a coffee maker, cellphone and air fryer.<\/p>\n

\u201cUntil they break, there\u2019s no need for me to buy one,\u201d the 22-year-old recent college grad said. \u201cI\u2019m being smart about the way I purchase things.\u201d<\/p>\n

Residential investment accounts for roughly 4% of U.S. gross domestic product, according to the Commerce Department. The category includes the construction of new homes, improvements to existing ones, brokers\u2019 commissions on property sales, and equipment built into residential structures like heating and air-conditioning units.<\/p>\n

The multiplier effect is large, according to the National Association of Realtors, the main trade association for real-estate agents. It estimates that the real-estate industry and related consumer spending accounts for about 17% of GDP. That includes spending on lawn care, home remodeling, new furniture, mortgage origination, moving, and building new homes.\u00a0News Corp, owner of The Wall Street Journal, also operates Realtor.com under license from the association.<\/p>\n

Businesses connected to the property sector\u00a0are coming off a strong couple of years<\/a>. For the better part of the past 15 years, households paid very little to borrow.<\/p>\n

Today, however, \u201cif you have to borrow to buy the good, you\u2019d expect higher rates to weigh\u201d on spending, said Paul Ashworth of Capital Economics.<\/p>\n

The post Home-Goods Retailers Jolted by Slowdown in Housing Market<\/a> appeared first on Real Estate News & Insights | realtor.com\u00ae<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"

MARIO TAMA \/ GETTY IMAGES Falling home sales are rippling through the economy, providing a window into how\u00a0rising interest rates\u00a0can cool spending, hiring and growth. When people buy new homes, they typically buy a lot to go inside, including furniture, curtains, lighting fixtures and appliances. Such spending has slowed or fallen this year as many…Read More→<\/a><\/p>\n","protected":false},"author":0,"featured_media":1238,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1237","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"_links":{"self":[{"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/posts\/1237","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/comments?post=1237"}],"version-history":[{"count":0,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/posts\/1237\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/media\/1238"}],"wp:attachment":[{"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/media?parent=1237"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/categories?post=1237"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/tags?post=1237"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}