Executive Summary

New orders were up 7% in February 2024 compared to February 2023, resuming our streak with 8 out of 9 straight months with order growth over the prior year after the decline in January. New orders were also up 5% over January 2024.

Shipments in February 2024 were down (5)% from February 2023, but up 8% from January 2024. February 2024 backlogs were down (24)% compared to February 2023, but flat compared to January 2024.

Receivable levels were up 1% from January 2024, but down (7)% from February 2023, which is materially in line with the decline in shipments for same period.

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

National

Consumer Confidence

The Conference Board Consumer Confidence Index® deteriorated for the third consecutive month in April, retreating to 97.0 (1985=100) from a downwardly revised 103.1 in March.

The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—declined to 142.9 (1985=100) in April from a downwardly revised 146.8 in March.

Meanwhile, the Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—fell to 66.4 (1985=100) from a slightly upwardly revised 74.0 last month. An Expectations Index reading below 80 often signals a forthcoming recession.

Expectations that stock prices will increase over the year ahead declined slightly, after rising every month since November of last year. Meanwhile, the share of consumers expecting higher interest rates over the year ahead rose again, to 53.8% in April. On a six-month basis, buying plans for homes and big-ticket appliances, which are interest-rate sensitive, continued to soften. Vacation plans also decreased to the lowest level since June 2023, with planned trips both within the US and abroad declining.

Housing

Existing-home sales slipped in March, according to the National Association of REALTORS®. Among the four major U.S. regions, sales slid in the Midwest, South and West, but rose in the Northeast for the first time since November 2023. Year-over-year, sales decreased in all regions.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – receded 4.3% from February to a seasonally adjusted annual rate of 4.19 million in March. Year-over-year, sales waned 3.7% (down from 4.35 million in March 2023).

Single-family home sales declined to a seasonally adjusted annual rate of 3.8 million in March, down 4.3% from 3.97 million in February and 2.8% from the prior year. The median existing single-family home price was $397,200 in March, up 4.7% from March 2023.

At a seasonally adjusted annual rate of 390,000 units in March, existing condominium and co-op sales decreased 4.9% from last month and 11.4% from one year ago (440,000 units). The median existing condo price was $357,400 in March, up 5.8% from the previous year ($337,900).

According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.88% as of April 11. That’s up from 6.82% the previous week and 6.27% one year ago.

Sales of new single‐family houses in March 2024 were at a seasonally adjusted annual rate of 693,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 8.8% above the revised February rate of 637,000 and is 8.3% above the March 2023 estimate of 640,000.

Compared to March 2023 on a seasonally-adjusted basis, sales were up 8.3% overall with sales up 4.5% in the South, 23.4% in the Midwest, 18.8% in the West, and down (13.2)% in the Northeast.

Other

Real gross domestic product (GDP) increased at an annual rate of 1.6% in the first quarter of 2024, according to the “advance” estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2023, real GDP increased 3.4%.

The increase in real GDP primarily reflected increases in consumer spending, residential fixed investment, nonresidential fixed investment, and state and local government spending that 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 0.3% in March 2024 from February 2024 on a seasonally-adjusted basis, and down 6.1% from March 2023.

Thoughts

We enjoyed attending the High Point Furniture Market in April and seeing so many old friends, great product, and new showrooms. Similar to the mixed results from our monthly stats, discussions of current business conditions, as well as expectations for the rest of 2024, were across the spectrum. However, a shared concern we heard repeatedly was about the continued lack of traffic in retail stores.

Nationally, consumer confidence remains shaky, with consumers relatively positive about their present situations, but growing more anxious about prospects for future business conditions and jobs, among other things. With waning consumer sentiment combined with stagnant GDP and housing, inflation refusing to budge, continued political and international concerns, and rate cuts slow to materialize from the Fed (as announced this week) things will presumably continue to be challenging for the industry for the duration of 2024. Perhaps some of those who have been on the sidelines of the housing market will drive some further activity despite the interest rate environment.

However, there are a few bright spots including national employment remaining steady. And while furniture orders certainly are not where we want them to be, they do remain above comparable periods of 2023, which along with manageable supply chains and inflation at least provides companies some continuity with which to manage their businesses, control what they can control, and pursue opportunities as they present themselves.

New Orders

According to our latest survey of residential furniture manufacturers and distributors, new orders were up 7% in February 2024 compared to February 2023, resuming our streak of 8 out of 9 straight months with order growth over the prior year after January’s decline. Approximately two-thirds of the participants reported increased orders in February 2024 compared to a year ago. New orders were also up 5% over January 2024.

Shipments and Backlogs

Shipments in February 2024 were down (5)% from February 2023, but up 8% from January 2024. Shipments in February 2024 were down for approximately two-thirds of the participants compared to February 2023. February 2024 backlogs were down (24)% compared to February 2023, but flat compared to January 2024.

Receivables and Inventories

Receivable levels were up 1% from January 2024, but down (7)% from February 2023, which is materially in line with the decline in shipments for same period.

Inventories were also up 1% from January 2024, but down (24)% from February 2023 (notably, same as backlog decline), again indicating that most companies have rebalanced their inventories levels to match current operations.

Factory and Warehouse Employees and Payroll

The number of factory and warehouse employees was down (7)% from February a year ago, and flat with January 2024. Similarly, payroll expenses were down (2)% from February a year ago, though up 5% from January 2024, likely due to some reduced production schedules to start the year.

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