December 2024 Furniture Insights Report From Smith Leonard

Furniture World News Desk on 1/3/2025

MONTHLY RESULTS

New Orders

According to our latest survey of residential furniture manufacturers and distributors, new orders were essentially flat in October 2024 compared to October 2023, which puts an end to 5 straight months of year over year declines we saw in May - September. As one might expect, there was an approximate 50/50 split of participants who reported increases versus decreases in October 2024 compared to a year ago. However, new orders were down 2% compared to the prior month of September 2024. Year to date through October 2024, new orders remain flat compared to 2023, not adjusted for inflation.

Shipments and Backlogs

October 2024 shipments were down 5% from October 2023, but up 4% from September 2024. Shipments in October 2024 were down for approximately 75% of the participants compared to October 2023.

Year to date through October 2024, shipments are down 7% compared to 2023.

October 2024 backlogs were down 8% compared to October 2023, but down 2% from September 2024 as current shipments outpaced new orders during the last month.

Receivables and Inventories

Receivable levels were up 6% from September 2024, but down 7% from October 2023, both of which are materially in line with the respective shipment trends.

Inventories were consistent with September 2024 at up 1% and down 8% from October 2023, which are in line with prior periods and current operational levels.

Factory and Warehouse Employees and Payroll

The number of factory and warehouse employees was down 5% from October a year ago, but even with September 2024. Payroll expense was down 2% in October 2024 compared to September 2024. Year to date through October 2024, payroll expense is again down 3%, which is materially consistent with the employee headcount and prior periods.

NATIONAL

Consumer Confidence

The Conference Board Consumer Confidence Index® declined by 8.1 points in December to 104.7 (1985=100).

The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell 1.2 points to 140.2.

The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions— tumbled 12.6 points to 81.1, just above the threshold of 80 that usually signals a recession ahead.

“The recent rebound in consumer confidence was not sustained in December as the Index dropped back to the middle of the range that has prevailed over the past two years,” said Dana M. Peterson, Chief Economist at The Conference Board. “While weaker consumer assessments of the present situation and expectations contributed to the decline, the expectations component saw the sharpest drop. Consumer views of current labor market conditions continued to improve, consistent with recent jobs and unemployment data, but their assessment of business conditions weakened. Compared to last month, consumers in December were substantially less optimistic about future business conditions and incomes. Moreover, pessimism about future employment prospects returned after cautious optimism prevailed in October and November.”

Among age groups, December’s fall in confidence was led by consumers over 35 years old; consumers under 35 became more confident. Among income groups, the decline was concentrated in consumers with household earnings between $25K and $100K, while consumers at the bottom and top of the income range reported only limited changes in confidence. On a six-month moving average basis, consumers aged under 35 and those earning over $100K remained the most confident.

Peterson added: “Consumers became a bit less bullish about the stock market in December: 52.9% expected stock prices to increase over the year ahead, down from a record high of 57.2% in November. Also, 25% of consumers expected stock prices to decline, up from 21.7%. The share of consumers expecting higher interest rates over the next 12 months ticked up to 48.5% but remained near recent lows. The share expecting lower rates eased to 29.3%—down from recent months but still quite high.”

The proportion of consumers anticipating a recession over the next 12 months was stable near the series low. Meanwhile, consumers’ assessments of their Family’s Financial Situation—both current and over the next six months—weakened. (These measures are not included in calculating the Consumer Confidence Index®.

Average 12-month inflation expectations stabilized at 5.0% in December, the lowest since March 2020. Additionally, references to inflation and prices dominated write-in responses. Asked what goods and services they expect to be more affordable in 2025, consumers mostly selected food and gas. Costs for gyms and live events, concerts, and sports were considered the least likely to be more affordable next year.

On a six-month moving average basis, purchasing plans for homes were down slightly in December, potentially reflecting rising mortgage rates despite Fed rate cuts. Purchasing plans for autos continued to increase, and more consumers planned to buy big- ticket items over the next 6 months than not. However, consumer buying plans for most appliances and electronics were still down on a 6-month moving average basis. Separately, consumers continued to express intentions to purchase additional services ahead, especially dining out and streaming. Travelling and going to the movies were somewhat lower on the spending list in December, while personal care and health care moved up. Consistent with these findings on travel spending intentions, vacation plans were down for both domestic and international travel.

In write-in responses about factors affecting consumers’ views of the economy, mentions of politics—including the outcome of November’s elections—continued to rise. Mentions of tariffs also increased in December. Notably, a special question this month showed that 46% of US consumers expected tariffs to raise the cost of living while 21% expected tariffs to create more US jobs.

Present Situation
Consumers’ assessments of current business conditions eroded somewhat in December.

• 19.1% of consumers said business conditions were “good,” down from 21.6% in November.
• 16.7% said business conditions were “bad,” up from 15.3%.

Consumers’ appraisals of the labor market improved in December.

• 37.0% of consumers said jobs were “plentiful,” up from 33.6% in November.
• 14.8% of consumers said jobs were “hard to get,” down from 15.2%.

Expectations Six Months Hence
Consumers were less optimistic about the outlook for business conditions in December.

• 21.7% of consumers expected business conditions to improve, down from 24.7% in November
• 18.3% expected business conditions to worsen, up from 15.9%.

Consumers’ assessments of the labor market outlook returned to being pessimistic.

• 19.1% of consumers expected more jobs to be available, down from 22.8% in November.
• 21.3% anticipated fewer jobs, up from 17.9%.

Consumers’ assessments of their income prospects were less optimistic in December.

• 17.2% of consumers expected their incomes to increase, down from 20.7% in November.
• 14.3% expected their incomes to decrease, up from 12.1% in November.

Assessment of Family Finances and Recession Risk

• Consumers’ assessments of their Family’s Current Financial Situation were significantly less positive in December compared to last month.
• Consumers’ assessments of their Family’s Expected Financial Situation were somewhat less optimistic.
• Perceived Likelihood of a US Recession over the Next 12 Months remained near the series low

Leading Economic Indicators

The Conference Board Leading Economic Index® (LEI) for the US increased by 0.3% in November 2024 to 99.7 (2016=100), nearly reversing its 0.4% decline in October. Over the six- month period between May and November 2024, the LEI declined by 1.6%, slightly less than its 1.9% decline over the previous six months (November 2023 to May 2024).

“The US LEI rose in November for the first time since February 2022,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board. “A rebound in building permits, continued support from equities, improvement in average hours worked in manufacturing, and fewer initial unemployment claims boosted the LEI in November. It’s worth noting that gains in building permits were not widespread geographically or by building type; they were concentrated mainly to the Northeast and Midwest, and on buildings with 5+ units rather than single-family dwellings. Overall, the rise in LEI is a positive sign for future economic activity in the US. The Conference Board currently forecasts US GDP to expand by 2.7% in 2024, but growth to slow to 2.0% in 2025.“

The Conference Board Coincident Economic Index® (CEI) for the US improved by 0.1% in November 2024 to 113.0 (2016=100)—the same rate of growth as each month between July and October. As a result, the CEI increased by 0.6% in the six-month period ending November 2024, slightly higher than its 0.5% growth over the previous six- month period. The CEI’s component indicators— payroll employment, personal income less transfer payments, manufacturing and trade sales, and industrial production—are included among the data used to determine recessions in the US. Personal income less transfer payments was the highest positive contributor to CEI, based on estimates for November, followed by payroll employment, and manufacturing and trade sales, all of which offset the third consecutive decline in industrial production.

The Conference Board Lagging Economic Index® (LAG) for the US increased by 0.3% to 118.8 (2016=100) in November 2024, after a decline of 0.1% in October. However, the LAG’s six-month growth rate was negative at 0.4% between May and November 2024, a partial reversal from its 0.6% increase over the previous six months.

Gross Domestic Product

Real gross domestic product (GDP) increased at an annual rate of 3.1% in the third quarter of 2024, according to the "third" estimate released by the U.S. Bureau of Economic Analysis. In the second quarter, real GDP increased 3.0%.

The GDP estimate is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 2.8%. The update primarily reflected upward revisions to exports and consumer spending that were partly offset by a downward revision to private inventory investment. Imports, which are a subtraction in the calculation of GDP, were revised up.

The increase in real GDP primarily reflected increases in consumer spending, exports, nonresidential fixed investment, and federal government spending. Imports increased.

Compared to the second quarter, the acceleration in real GDP in the third quarter primarily reflected accelerations in exports, consumer spending, and federal government spending. These movements were partly offset by a downturn in private inventory investment and a larger decrease in residential fixed investment. Imports accelerated.

Current dollar GDP increased 5.0% at an annual rate, or $358.2 billion, in the third quarter to a level of $29.37 trillion, an upward revision of $20.6 billion from the previous estimate.

The price index for gross domestic purchases increased 1.9% in the third quarter, the same as the previous estimate. The personal consumption expenditures (PCE) price index increased 1.5%, also the same as previously estimated. Excluding food and energy prices, the PCE price index increased 2.2%, an upward revision of 0.1 percentage point.

HOUSING

Existing-Home Sales

Existing-home sales grew in November, according to the National Association of Realtors®. Sales advanced in three major U.S. regions and remained steady in the West. Year-over-year, sales climbed in all four regions

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – improved 4.8% from October to a seasonally adjusted annual rate of 4.15 million in November. Year- over-year, sales bounced 6.1% (up from 3.91 million in November 2023).

"Home sales momentum is building," said NAR Chief Economist Lawrence Yun. "More buyers have entered the market as the economy continues to add jobs, housing inventory grows compared to a year ago, and consumers get used to a new normal of mortgage rates between 6% and 7%.”

Single-family home sales progressed 5.0% to a seasonally adjusted annual rate of 3.76 million in November, up 7.4% from the previous year. The median existing single-family home price was $410,900 in November, up 4.8% from November 2023.

Existing condominium and co-op sales increased 2.6% in November to a seasonally adjusted annual rate of 390,000 units, down 4.9% from one year ago (410,000). The median existing condo price was $359,800 in November, up 2.8% from the prior year ($350,100).

According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.6% as of December 12. That's down from 6.69% one week ago and 6.95% one year ago.

Total housing inventory registered at the end of November was 1.33 million units, down 2.9% from October but up 17.7% from one year ago (1.13 million). Unsold inventory sits at a 3.8-month supply at the current sales pace, down from 4.2 months in October but up from 3.5 months in November 2023.

The median existing-home price for all housing types in November was $406,100, up 4.7% from one year ago ($387,800). All four U.S. regions posted price increases.

"Existing homeowners are capitalizing on the collective $15 trillion rise in housing equity over the past four years to look for homes better suited to their changing life circumstances," Yun added.”

According to the monthly REALTORS® Confidence Index, properties typically remained on the market for 32 days in November, up from 29 days in October and 25 days in November 2023.

First-time buyers were responsible for 30% of sales in November, up from 27% in October but down from 31% in November 2023. NAR's 2024 Profile of Home Buyers and Sellers – released November 2024 – found that the annual share of first-time buyers was 24%, the lowest ever recorded.

Regional

Existing-home sales in the Northeast in November jumped 8.5% from October to an annual rate of 510,000, up 6.3% from November 2023. The median price in the Northeast was $475,500, up 9.9% from last year.

In the Midwest, existing-home sales grew 5.3% in November to an annual rate of 1 million, up 5.3% from the previous year. The median price in the Midwest was $302,000, up 7.3% from November 2023.

Existing-home sales in the South rose 5.6% from October to an annual rate of 1.87 million in November, up 3.3% from one year before. The median price in the South was $361,300, up 2.8% from one year earlier.

In the West, existing-home sales were unchanged in November at an annual rate of 770,000, up 14.9% from a year ago. The median price in the West was $628,200, up 4.0% from November 2023.

New Residential Sales

Sales of new single-family houses in November 2024 were at a seasonally adjusted annual rate of 664,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 5.9% above the revised October rate of 627,000 and is 8.7% above the November 2023 estimate of 611,000.

The median sales price of new houses sold in November 2024 was $402,600 ($437,300 in October 2024). The average sales price was $484,800 ($545,800 in October 2024).

The seasonally-adjusted estimate of new houses for sale at the end of November was 490,000. This represents a supply of 8.9 months at the current sales rate (9.5 months in October 2024).

Compared to November 2023 on a seasonally-adjusted basis, sales were up 8.7% overall with sales also up 13.6% in the South and 10.0% in the Midwest, but down 11.5% in the Northeast and 1.4% in the West.

Housing Starts

Privately-owned housing starts in November were at a seasonally adjusted annual rate of 1,289,000. This is 1.8% below the revised October estimate of 1,312,000 and is 14.6% below the November 2023 rate of 1,510,000.

Single-family housing starts in November were at a rate of 1,011,000; this is 6.4% above the revised October figure of 950,000.

The November rate for units in buildings with five units or more was 264,000 (326,000 in October).

Housing Completions

Privately-owned housing completions in November were at a seasonally adjusted annual rate of 1,601,000. This is 1.9% below the revised October estimate of 1,632,000, but is 9.2% above the November 2023 rate of 1,466,000

Single-family housing completions in November were at a rate of 1,038,000; this is 3.3% above the revised October rate of 1,005,000.

The November rate for units in buildings with five units or more was 544,000 (615,000 in October).

Single-family completions compared to November 2023, on a seasonally-adjusted basis, were up 7.0% in total and also up 0.7% in the South, up 24.8% in the Midwest, up 19.0% in the West, while down 7.3% in the Northeast.

OTHER NATIONAL

Retail Sales

Advance estimates of U.S. retail and food services sales for November 2024, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $724.6 billion, an increase of 0.7% from the previous month, and up 3.8% from November 2023. Total sales for the September 2024 through November 2024 period were up 2.9% from the same period a year ago. The September 2024 to October 2024 percent change was revised from up 0.4% to up 0.5%.

Retail trade sales were up 0.9% from October 2024, and up 4.1% from last year. Motor vehicle and parts dealers were up 6.5% from last year, while Nonstore retailers were up 9.8% from November 2023.

Sales at furniture and home furnishings stores were essentially flat in November 2024 from October 2024 on a seasonally-adjusted basis, but up 0.1% from November 2023. Sales were down 3.3% for year to date November 2024 compared to the same period for 2023 on an unadjusted basis.

Consumer Prices

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3% on a seasonally adjusted basis in November, after rising 0.2% in each of the previous 4 months, the U.S. Bureau of Labor Statistics reported. Over the last 12 months, the all-items index increased 2.7% before seasonal adjustment.

The index for shelter rose 0.3% in November, accounting for nearly forty percent of the monthly all-items increase. The food index also increased over the month, rising 0.4% as the food at home index increased 0.5% and the food away from home index rose 0.3%. The energy index rose 0.2% over the month, after being unchanged in October.

The index for all-items less food and energy rose 0.3% in November, as it did in each of the previous 3 months. Indexes that increased in November include shelter, used cars and trucks, household furnishings and operations, medical care, new vehicles, and recreation. The index for communication was among the few major indexes that decreased over the month.

The all-items index rose 2.7% for the 12 months ending November, after rising 2.6% over the 12 months ending October. The all items less food and energy index rose 3.3% over the last 12 months. The energy index decreased 3.2% for the 12 months ending November. The food index increased 2.4% over the last year.

Employment

Total nonfarm payroll employment rose by 227,000 in November, and the unemployment rate changed little at 4.2%, the U.S. Bureau of Labor Statistics reported. Employment trended up in health care, leisure and hospitality, government, and social assistance. Retail trade lost jobs.

Both the unemployment rate, at 4.2%, and the number of unemployed people, at 7.1 million, changed little in November. These measures are higher than a year earlier, when the jobless rate was 3.7%, and the number of unemployed people was 6.3 million

Durable Goods Orders and Factory Shipments

New orders for manufactured durable goods in October, up following two consecutive monthly decreases, increased $0.8 billion or 0.3% to $286.8 billion, up from the previously published 0.2% increase. This followed a 0.4% September decrease. Transportation equipment, also up following two consecutive monthly decreases, led the increase, $0.5 billion or 0.5% to $97.1 billion. New orders for manufactured nondurable goods increased $0.3 billion or 0.1% to $299.9 billion.

Shipments of manufactured durable goods in October, down three consecutive months, decreased $1.5 billion or 0.5% to $285.5 billion, up from the previously published 0.6% decrease. This followed a 0.8% September decrease. Transportation equipment, also down three consecutive months, drove the decrease, $1.9 billion or 2.0% to $92.0 billion. Shipments of manufactured nondurable goods, up following two consecutive monthly decreases, increased $0.3 billion or 0.1% to $299.9 billion. This followed a 0.1% September decrease. Petroleum and coal products, also up following two consecutive monthly decreases, drove the increase, $0.3 billion or 0.4% to $62.1 billion.

On a seasonally-adjusted basis, shipments for furniture and related products were down 0.6% compared to the prior month, while new orders were also down 0.8%. On a non-adjusted basis, year to date shipments for furniture and related products were up 0.9% compared to the prior year, while year to date new orders were up 1.7%.

Executive Summary

New orders were essentially flat in October 2024 compared to October 2023, which puts an end to 5 straight months of year over year declines we saw in May – September. However, new orders were down 2% compared to the prior month of September 2024. Year to date through October 2024, new orders remain flat compared to 2023.

October 2024 shipments were down 5% from October 2023, but up 4% from September 2024.

October 2024 backlogs were down 8% compared to October 2023, and also down 2% from September 2024.

Inventories and employee/payroll levels are again materially in line with recent months, but down from 2023, indicating that companies have aligned levels to match current operations.

National

Consumer Confidence

The Conference Board Consumer Confidence Index® declined by 8.1 points in December to 104.7 (1985=100).

The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell 1.2 points to 140.2.

The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—tumbled 12.6 points to 81.1, just above the threshold of 80 that usually signals a recession ahead.

The recent rebound in consumer confidence was not sustained in December as the Index dropped back to the middle of the range that has prevailed over the past two years,” saidDana M. Peterson, Chief Economistat The Conference Board. “While weaker consumer assessments of the present situation and expectations contributed to the decline, the expectations component saw the sharpest drop. Consumer views of current labor market conditions continued to improve, consistent with recent jobs and unemployment data, but their assessment of business conditions weakened. Compared to last month, consumers in December were substantially less optimistic about future business conditions and incomes. Moreover, pessimism about future employment prospects returned after cautious optimism prevailed in October and November.”

On a six-month moving average basis, purchasing plans for homes were down slightly in December, potentially reflecting rising mortgage rates despite Fed rate cuts. Purchasing plans for autos continued to increase, and more consumers planned to buy big-ticket items over the next 6 months than not. However, consumer buying plans for most appliances and electronics were still down on a 6-month moving average basis.

Housing

Existing-home sales grew in November, according to the National Association of Realtors®. Sales advanced in three major U.S. regions and remained steady in the West. Year-over-year, sales climbed in all four regions.

Total existing-home sales – completed transactions that include single family homes, townhomes, condominiums and co-ops –improved 4.8% from October to a seasonally adjusted annual rate of 4.15 million in November. Year-over-year, sales bounced 6.1% (up from 3.91 million in November 2023).

Single-family home sales progressed 5.0% to a seasonally adjusted annual rate of 3.76 million in November, up 7.4% from the previous year. The median existing single-family home price was $410,900 in November, up 4.8% from November 2023.

Existing condominium and co-op sales increased 2.6% in November to a seasonally adjusted annual rate of 390,000 units, down 4.9% from one year ago (410,000). The median existing condo price was $359,800 in November, up 2.8% from the prior year ($350,100).

According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.6% as of December 12. That’s down from 6.69% one week ago and 6.95% one year ago.

Sales of new single-family houses in November 2024 were at a seasonally adjusted annual rate of 664,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 5.9% above the revised October rate of 627,000 and is 8.7% above the November 2023 estimate of 611,000.

Compared to October 2023 on a seasonally-adjusted basis, sales were up 8.7% overall with sales also up 13.6% in the South and 10.0% in the Midwest, but down 11.5% in the Northeast and 1.4% in the West

Other

Real gross domestic product (GDP) increased at an annual rate of 3.1% in the third quarter of 2024, according to the “third” estimate released by the U.S. Bureau of Economic Analysis. In the second quarter, real GDP increased 3.0%.

The increase in real GDP primarily reflected increases in consumer spending, exports, nonresidential fixed investment, and federal government spending. Imports increased.

Sales at furniture and home furnishings stores were essentially flat in November 2024 from October 2024 on a seasonally-adjusted basis, but up 0.1% from November 2023. Sales were down 3.3% for year to date November 2024 compared to the same period for 2023 on an unadjusted basis.

Thoughts

I hope everyone has had a restful and enjoyable holiday break.

We continued to see many of the national economic indicators trending in the right direction this month, particularly an increase in existing-home sales, and industry reports about last month’s Black Friday and other holiday retail sales activity have been largely positive. In addition, inflation has slowed enough to allow the Fed to make another 0.25% interest rate cut in December.

Meanwhile, the impact of potential tariffs and labor restrictions has many developing contingency plans and evaluating their options, while simultaneously monitoring the looming East/Gulf Coast port strike and what effect that will have on logistics and already rising container costs.

Despite these challenges, recent reports project modest growth for the coming year with many in the industry relatively optimistic about the prospects for 2025 and beyond.

After several months of year over year new order declines, our monthly stats do seem to suggest that the collective tide may be turning, so like many others, we are hopeful there is enough lasting positive momentum to outweigh the potential negatives, and that with a little luck and a lot of hard work, those that “survived until 2025” will be rewarded for their efforts.

Wishing everyone the best in the new year.

 

This Furniture Insights® newsletter report has been re-published with the permission of Smith Leonard PLLC an independent member of the BDO Seidman Alliance.

Firm Profile: Founded in 1930 by BDO Seidman, LLP, the High Point, North Carolina practice was recently acquired by four individuals who have spent the majority of their 100+ year careers building the existing practice. Beginning January 1, 2007, Smith Leonard PLLC became an independent member of the BDO Seidman Alliance. Partners are Ken Smith, Darlene Leonard, Jon Glazman and Mark Bulmer. Among the firm's 32 employees are 18 CPAs.

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Many of its clients are either furniture manufacturers, distributors or suppliers to the furniture industry. Smith Leonard also services companies in retail, transportation, insurance, not-for-profit entities and employee benefit plans. Smith Leonard offers a full range of accounting and consulting services including audits, compilations, reviews, tax planning and compliance. The partners and staff of Smith Leonard also assists clients in mergers, acquisitions, business consulting, cash flow projections, and tax outsourcing. Individual clients benefit from extensive experience in family wealth services including estate tax planning.

The firm continues to produce monthly and annual statistics for the furniture industry. For more information call (336) 883-018 or e-Mail: ksmith@smithleonardcpas.com.