If you want insight into the general health of the residential carpet segment, look no further than the U.S. housing market, where indicators like housing starts, home sales (new and existing), inventory levels, mortgage rates and affordability provide a snapshot.
It‘s not a pretty picture.
Through three quarters of 2025, the housing market has been characterized by persistent affordability issues, with high home prices and elevated mortgage rates making it difficult for buyers.
All of which means the residential carpet segment has declined in 2025 to the tune of mid-single digits vs. the year-ago period. “Residential carpet is still in a reduced level of business,” said James Lesslie, COO of Engineered Floors. “Existing–home sales are down to 4 million houses a year. High interest rates are keeping people in their own homes as their existing homes are financed with lower mortgage rates. In addition, people are continuing to stay in apartments because of affordability issues with new houses.”
Given the level of uncertainty in the overall economy this year, carpet executives are loathe to predict a quick turnaround. While the consensus is the market will respond when mortgage rates come down to, say, 6% or below, no one is betting the ranch on that happening anytime soon.
“It’s very difficult to predict what will happen over the next six to 12 months,” said T.M. Nuckols, president of the residential division of The Dixie Group. “Hopefully interest rates will continue to fall. Over time that should lead to more movement in home sales and renovation activity, which will mean increased demand for flooring and carpet. How much of that happens in the next six-12 months remains to be seen.”
Lesslie, like others, says the next two quarters will yield conditions similar to today, with some improvement seen near the end of the 12-month period. “The affordability problem with housing is a massive problem for the country that will take some time to solve,” he explained.
To illustrate, the U.S. median price for an existing single-family home hit an all-time high of $435,300 in June 2025, according to the National Association of Realtors (NAR), marking the 24th consecutive month of annual price growth.
At the same time, more than half of U.S. homeowners have mortgage rates below 4%, contributing to the housing market’s “lock-in effect,” as homeowners are hesitant to move and take on much higher rates.
“The residential carpet market has steadied but hasn’t bounced back,” said Joe Semaan, president of residential soft surface for Mohawk. “Home turnover is still slow, so big replacements are cautious, and remodels are improving—just not fast.”
Mill executives looking for any positive signs to latch onto say interest rates will trend downward, unleashing some of the pent-up demand that heretofore has been mostly dormant. “Consumers who have put off moving to a new home or completing remodeling projects in their current home are starting to re-engage, and as interest rates continue to decrease, we anticipate that momentum to grow,” said Megan Simmons, senior product manager-soft surface, Tarkett Home.
The stagnant market doesn’t mean consumers have stopped shopping entirely. The well-to-do segment continues to spend on higher-end carpet and is more willing to proceed on home renovations, executives say. “The high–end/luxury segment has been a bright spot during the downturn,” TDG’s Nuckols said. “Wealthy consumers are less impacted by downturns in the economy and high interest rates.”
While higher end has performed well, the bulk of the residential market still operates at more affordable price points, between $12 and $14 per square yard (wholesale), where polyester is the dominate fiber choice, at least on the residential side. “We have seen strength at both ends of the spectrum: entry-level price points driven by strong demand from builder and multifamily while the high end has performed strongly as consumers continued to invest in premium, design-forward carpet,” Mohawk’s Semaan said. “The middle of the market has been more challenging, as value expectations have shifted. Customers are either trading down or stepping up based on their priorities.”
Another clear trend: carpet buying has evolved from a whole house purchase offering few styles and colors to more variety for individual consumer tastes who are purchasing for specific rooms. “What’s important is that expectations have risen,” said Jamie Welborn, vice president of carpet product for Shaw. “Consumers want carpet that reflects how they live and the emotional connection they have with their home … the category may be smaller in scale than it once was, but it is more strategic than ever. Carpet is a differentiated product that complements hard surfaces, adds design dimension and provides unmatched comfort.”
Despite the continued growth of hard surfaces, mills tout the advantages of carpet—warmth, comfort underfoot and styling with texture and depth—as key attributes that are resonating with consumers. “Shoppers are spending on the rooms they live in every day: primary bedrooms, kids’ rooms, stairs and landings—where softness, quiet and easy cleanup really matter,” Mohawk’s Semaan said. “At retail, better goods with real hand, texture and a clear color story are outperforming bare-bones basics when people decide to upgrade.”
The road ahead
Through the first two quarters of 2025, residential carpet is down 6.1% in square feet vs the year-ago period and down 6.6% in dollars, with Q2 showing an improvement over the prior quarter, according to FCNews estimates.
Still, for the residential carpet segment to turn the corner, sales of both new and existing homes will have to increase in a meaningful way.
Adding to the challenge of mortgage rates and home prices is that fact that Americans are waiting longer to buy homes, with the median age for first-time buyers reaching 38 in 2024 and the median age for all buyers reaching a record 56 years of age, according to NAR data.
Engineered Floors’ Lesslie said this scenario impacts the timing and scale of flooring investments. “Existing–home sales and pending sales have been weaker throughout the year, suggesting that people are buying fewer homes in 2025, which is affecting our market,” he noted. “Given the current state of the economy, flooring is seen as a steep investment, and consumers are more hesitant to make such a commitment.”
The bright spot for mills is an older population generally favors soft surfaces—and for those where price does matter, carpet is generally more affordable than hard surface. “Nothing else satisfies like carpet’s warmth, softness under foot or sound absorption—and people are rediscovering that,” said Drew Hash, president/CEO of Southwind. “There are always the unique advantages of soft surface over hard surface flooring. And there is always the affordability advantage.”
TDG’s Nuckols echoed that sentiment, adding, “The price points of hard surface line up well with high–end carpet, so there is less reluctance from the consumer from that angle. What’s more, dealers and RSAs have more confidence in showing and selling better goods; that means more revenue and profit for the dealer and more commission for the RSA. And the consumer gets a better product that will last longer.”
The post Carpet: State of the Industry 2025 appeared first on Floor Covering News.
Carpet: State of the Industry 2025 Posted First on https://fcnews.net
No comments:
Post a Comment