by Current mortage-rate levels appear to be having a bigger impact on the purchase plans of younger versus older consumers
HIGH POINT — There’s been a lot of talk in the industry of late — perhaps in the last year or more — about how high interest rates are impacting furniture sales.
It’s an obvious concern as these rates — while not exceedingly high from a historical perspective — are delaying some existing homeowners from moving into new homes and also buying furniture as they tend to do with such moves. The good news is that people are still buying homes, whether it’s new construction or existing homes that have been on the market.
A segment of our latest Consumer Insights Now research offers a glimpse of those consumers’ reactions to the current rates and how it’s affecting their furniture buying plans in the first half of this year.
According to the survey, 7% of the respondents purchased a home in 2023. Of those, 24% said that high interest rates are having a large effect on their furniture-buying plans, with the balance saying it is having some effect or no effect at all.
Baby boomers ages 60 and up represented less than 1% of those saying it was having a large effect, which makes sense given that many of those buyers are more financially stable than younger consumers just starting their careers and families. As seen in the chart below, higher percentages of those consumers said the rates were having an impact, including 27% of Gen Z; 27% of younger millennials; 24% of older millennials; and 31% of Gen X consumers.
Our research expert Dana French dug deeper, asking for specifics regarding the impact of high interest rates. Of those saying it’s having a big or even some effect, the individual responses she gathered shed significant light on the issue and what’s at stake for retailers and wholesalers alike.
Here are some of the responses people had to higher home loans and interest rates in general.
+ It has limited the amount of money reserved for furniture.
+ I had to cut back spending on nonessential items.
+ I have less money to spend.
+ With interest rates going up, it makes it more difficult to buy furniture.
+ I’m buying over time rather than all at once.
+ I am not able to buy all that I want to fill my space. I’m still missing some needed furniture a year after moving in.
+ I have to buy what I can afford rather than what I want or like.
Such consumer sentiments likely shaped discussions at the most recent High Point Market, where retailers were not only looking for the best prices they could get, but also the best values. With consumers being strapped for cash, and perhaps caught up in other financial obligations, the goal is to change the dynamic in a way that aims to give consumers both what they want and what they can afford at the same time. It’s a delicate balance, but based on what we heard from vendors, written orders were particularly strong for a market whose success in the past has largely been based on commitments that don’t turn into orders for a least a few weeks, if not months, after market.
That’s good news for consumers looking to fulfill not just their furniture buying needs, but also their wants. Of course, some of that product won’t hit dealers’ floors for another several months, but it appears that once that happens, it could begin the road to recovery that we all are hoping for in the second half and beyond.
Obviously there are still good deals and product to be found on floors around the country today. But if the offerings at this past market are any indication, the mix of product will be even better for retailers and their customers alike. With a sense of optimism that many in the industry have with any market cycle — be it High Point or Las Vegas — we can only trust that it will help move the needle for those consumers challenged by interest rates.
Of course, it also wouldn’t hurt if those rates came down either.
