Executive Summary

New orders were down (1)% in January 2024 compared to January 2023 breaking our streak of 8 straight months with order growth over the prior year. However, new orders were up 7% over December 2023.

Shipments in January 2024 were down (13)% from January 2023, which is consistent with the (14)% decline last month and the (17)% annual decline we saw in 2023 compared to 2022. However, shipments were up 2% over December 2023 after returning from the holiday break. And with month-over-month orders declining and shipments up slightly, January 2024 backlogs were down (1)% from December 2023 and down (27)% compared to January 2023.

Receivable levels were up 6% from December 2023, which is likely a function of timing around the holidays. However, receivable levels were down (12)% from January 2023, which is materially in line with the decline in shipments.

Inventories and employee levels are again in line with recent months, but down from January 2023, indicating that companies have substantially adjusted levels to match current operations.

National

Consumer Confidence

The Conference Board Consumer Confidence Index® was 104.7 in March, essentially unchanged from a downwardly revised 104.8 in February.

The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—increased to 151.0 in March from 147.6 in February.

Meanwhile, the Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—fell to 73.8, down from 76.3 last month. An Expectations Index reading below 80 often signals a forthcoming recession.

Sentiment about stock prices over the year ahead continued to strengthen. The share of consumers expecting an increase in interest rates over the year ahead rose above 50% for the first time since November 2023. On a six-month basis, buying plans for interest-rate-sensitive items like autos, homes, and big-ticket appliances dipped again. However, based on a supplemental question, planned spending for services in 2024 increased relative to the same time last year. Among services, consumers anticipate spending more on health care, motor vehicle services, and lodging for personal travel, but less on entertainment.

Housing

Existing-home sales climbed in February, according to the National Association of REALTORS®. Among the four major U.S. regions, sales jumped in the West, South, and Midwest, and were unchanged in the Northeast. Year-over-year, sales declined in all regions.
Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – bounced 9.5% from January to a seasonally adjusted annual rate of 4.38 million in February. Year-over-year, sales slid 3.3% (down from 4.53 million in February 2023).

Single-family home sales grew to a seasonally adjusted annual rate of 3.97 million in February, up 10.3% from 3.6 million in January but down 2.7% from the previous year. The median existing single-family home price was $388,700 in February, up 5.6% from February 2023.

At a seasonally adjusted annual rate of 410,000 units in February, existing condominium and co-op sales increased 2.5% from last month but declined 8.9% from one year ago (450,000 units). The median existing condo price was $344,000 in February, up 6.7% from the previous year ($322,400).

According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.74% as of March 14. That’s down from 6.88% the prior week but up from 6.60% one year ago.

Sales of new single‐family houses in February 2024 were at a seasonally adjusted annual rate of 662,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 0.3% below the revised January rate of 664,000 but is 5.9% above the February 2023 estimate of 625,000.

Compared to February 2023 on a seasonally adjusted basis, sales were up 5.9% overall with sales up 60.9% in the Northeast, 15.3% in the Midwest, 43.4% in the West, and down (10.0)% in the South.

Other

Real gross domestic product (GDP) increased at an annual rate of 3.4% in the fourth quarter of 2023, according to the “third” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 4.9%.

The increase in real GDP primarily reflected increases in consumer spending, state and local government spending, exports, nonresidential fixed investment, federal government spending, and residential fixed investment which were partly offset by a decrease in private inventory investment. Imports, which are a subtraction in the calculation of GDP, increased.

Sales at furniture and home furnishings stores were down 1.1% in February 2024 from January 2024 on a seasonally-adjusted basis, and down 10.1% from February 2023.

Thoughts

Consumer sentiment related to the current economic environment remained largely unchanged from the prior month. And despite diminishing concerns about inflation and the likelihood of a widespread recession, the general outlook for the remainder of the year has deteriorated due to concerns about future business conditions, jobs, and the political environment, among other things. Some of these negative sentiments seem to be playing into what we’re seeing with new order trends in our monthly year-over-year stats recently.

But at the same time, the housing market continues to show signs of life despite the elevated interest rate environment. Perhaps buyers have finally accepted this new normal and gotten on with life. Hopefully this activity, along with the expected interest rate cuts from the Fed in the second half of the year, will spur additional housing and furniture sales.
We look forward to seeing many of you at the High Point Spring Market in a few weeks.

New Orders

According to our latest survey of residential furniture manufacturers and distributors, new orders were down (1)% in January 2024 compared to January 2023 breaking our streak of 8 straight months with order growth over the prior year. Approximately half of the participants reported increased orders in January 2024 compared to a year ago. However, new orders were up 7% over December 2023, which would be expected after returning from the holidays.

Shipments and Backlogs

Shipments in January 2024 were down (13)% from January 2023, which is consistent with the (14)% decline last month and the (17)% annual decline we saw in 2023 compared to 2022. However, shipments were up 2% over December 2023 after returning from the holiday break. Shipments in January 2024 were down for approximately three-fourths of the participants compared to January 2023. So despite recent improvement in new orders overall, trends continue to be affected by many companies shipping from their historically high backlogs through much of 2022 into early 2023. And with month-over-month orders declining and shipments up slightly, January 2024 backlogs were down (1)% from December 2023 and down (27)% compared to January 2023.

Receivables and Inventories

Receivable levels were up 6% from December 2023, which is likely a function of timing around the holidays. However, receivable levels were down (12)% from January 2023, which is materially in line with the decline in shipments.
Inventories were down slightly from December 2023 and were down (28)% from January 2023, again indicating that most companies have rebalanced their inventory levels to match current operations.

Factory and Warehouse Employees and Payroll

The number of factory and warehouse employees was down (7)% from January a year ago and materially flat with December 2023, again indicating most companies have right-sized their teams, though most are still eager to add good people when available.

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