Two-thirds of 2025 have been completed, but for many flooring retailers every day feels like Groundhog Day as the main impediments from a year ago—elevated mortgage rates and stubborn inflation—continue to be a buzzkill for what many hoped would be a resurgent year.
Instead, dealers are left with a mixed bag of results. Yes, some are posting healthy top-line sales, but many others are seeing declines due to a stagnated housing market.
“Without question the slowdown in real-estate activity at every level has dampened sales growth,” said Greg Loeffler, COO of Pierce Companies, dba Pierce Flooring & Cabinet Design Center, Billings, Mont. “This is a combination of uncertainty in the economy, fears of tariff impacts, mortgage rates and overall nervousness by many consumers that is keeping them in their current homes.”
While tariffs have garnered the major headlines in 2025 and have been a nuisance for dealers—it’s the immovable object of mortgage rates that have stymied home purchases. Fixed rates on 30-year mortgages have remained relatively stable in ’25, hovering around the 6.8% mark for much of the year. In fact, the 2025 average has been slightly higher than the 6.7% average seen in 2024. The big question remains: Will rates come down meaningfully, or are we in for a longer period of high borrowing costs?
Flooring businesses that focus primarily on residential replacement have been particularly impacted this year. “We are definitely hurt by the mortgage interest rates keeping consumers from buying and selling homes,” said Janice Clifton, owner, Abbey Carpets Unlimited, Napa, Calif. “Also, interest rates being high don’t help with customers who want to fix up their existing home.”
To complicate matters, inflation is on the rise again. After steadily falling since mid-2022, import prices in July rose at their fastest pace this year in July, according to economist Elliot Eisenberg. “Annual inflation as measured by the CPI [consumer price index] has now risen three straight months, all while the labor market weakens,” Eisenberg wrote. “Tariffs are starting to slowly make their presence felt.”
To date, tariffs have been a mixed bag for dealers, with some saying they have been only minimally affected. But not all share that sentiment. “Higher mortgage rates and tariff confusion have definitely challenged our market,” said Tom Connell, owner of M&M Carpet Showroom, Houston. “Earlier in the year I did not think tariffs would affect us much—that we would just pass it through like we usually do on price increases. However, the confusion and back and forth on whether certain products has been a challenge. It has affected our profitability in a negative way. Because there are so many iterations, we have missed a few [increases] and not been able to pass them on to our clients. It also takes us much more time to research and are constantly confirming prices.”
Tariffs are also a big issue for Hemphill’s Rugs & Carpets, Costa Mesa, Calif., which is down 10% year-to-date vs. 2024. “Some vendors are absorbing all or part of the tariffs; others are charging the full percentage on our wholesale cost versus their wholesale cost. Thus, a profit center [for them],” said Brett Hemphill, owner. “I do not think this is a good way to partner with dealers.”
But like many other dealers, Hemphill is among those who believe they are close to turning the corner. “A few good sales will get us back on track,” he told FCNews. “The pleasant surprise is our carpet and rugs business is strong. Our decrease in business is in the hard surface categories, specifically vinyl plank flooring and wood.”
The current market favors those dealers who sell higher-end goods or who can generate bigger tickets. A case in point is Carpetland USA (The Langan Group), with nine locations across Iowa and Illinois. “We’re seeing less traffic, but we are selling larger tickets and higher-end goods,” said Eric Langan, president/owner. “This has been the case for the last 12-18 months. Business and traffic have been choppy throughout 2025. I think this is due in part to the uncertainty regarding tariffs. However, we’ve seen an uptick in retail traffic and business over the past 45 days, which is encouraging. We’re hopeful for a strong finish to the 2025 year.”
Despite the aggravation with tariffs, M&M’s Connell said sales for 2025 are still up over this time last year, bolstered by its strong position in luxury goods. “The luxury market is a little more resilient to price adjustments, whether on the product side or on the home mortgage rate side,” he explained.
Given the inconsistent nature of the retail segment, commercial has proven to be a bright spot for some dealers. “Retail has been slow this summer, but our commercial business is still very strong,” said Penny Carnino. COO, Grigsby’s Carpet, Tile & Hardwood, Tulsa, Okla. “This has certainly been an up and down year for us. We are down 4%, but we have had three really good comeback months. We have been able to finally close out some really big commercial jobs and are hoping over the next few months to close that 4% gap.”
In the meantime, retailers are hopeful that overall conditions will improve. Pierce’s Loeffler is of the mind that business conditions will favor flooring dealers down the stretch. “I believe the current slowdown in real estate movement will ease off noticeably in the fourth quarter as the economy proves to be stable and mortgage rates will fall just enough to put more consumers in the market for a new/different home,” he stated.
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