The slowing housing market has an unintended victim: the home goods market, in which sales have fallen 1.6% year-over-year (YOY) since August 2021.
As the housing market decelerates, consumers see less need for furniture, appliances, décor, and other home goods; electronics and appliance store sales fell 5.7% YOY from August 2022, according to the United States Census Bureau. Order cancellations have become more prevalent, and new orders have declined more than 39% in the past year, according to Smith Leonard PLLC, a full-service accounting firm. Cancellations have, at points, exceeded new orders, notes a newsletter from Smith Leonard.
As a result of these sales issues, some home goods stores have had to lay off portions of their workforce. Home goods giant Bed Bath & Beyond is laying off 20% of its employees and closing 150 stores within the next few months. Serta Simmons Bedding, which distributes mattresses to vendors across the country, laid off 284 workers across three factories in early 2022.
Meanwhile, Corsicana Mattress, based out of Dallas, Texas, also plans to close their Olive Branch, Mississippi factory in the coming weeks. And Massachusetts-based Simon’s Furniture, Mattresses, and Appliances report that they’re over-inventoried, like many other companies; their inventory is 55% higher than pre-COVID levels.
The housing boom from 2020 is now sufficiently calmed, and many who looked to acquire more space during the pandemic accomplished their goals. At the same time, the home goods market experienced a huge boom, as consumers were spending more time indoors and chose to buy items to make their surroundings more pleasing rather than spending money on vacations or dining.
The main reason consumers are not looking to purchase homes currently, says Robert Dietz, Chief Economist at the National Association of Home Builders, is that inflation of construction prices and tight monetary policies from the Federal Reserve have been difficult for many to tolerate. High inflation rates are also preventing consumers from spending more money on items they would typically purchase voluntarily.