Single-family housing starts, a demand indicator for furniture manufacturing, are expected to grow a noteworthy 20% in 2016, according to the 2016 Dodge Construction Outlook. As a result, companies serving the nation’s $70 billion furniture-manufacturing industry can continue to count on consumers outfitting their homes.
Newly purchased homes are growing in size as well. According to the 2015 Profile of Home Buyers and Sellers report produced by the National Association of Realtors, 42% of all buyers regardless of region purchased larger homes in 2015, up from 40% in 2014.
The highest percentage of home buyers who were trading up to larger homes lived in eight southern states: Alabama, Arkansas, Kentucky, Louisiana, Mississippi, Oklahoma, Tennessee, and Texas.
Sellers are benefiting from home prices that have risen since the recession, tapping into well-earned equity to trade up to bigger homes while mortgage interest rates are still relatively low. Home owners in 2015 sold their homes for $40,000 more on average than they purchased them, up from $30,100 in 2014.
With more elbow room, home owners have empty rooms to fill. Catching consumers at the optimum time is key for successful marketing efforts. About 60% of new home owners buy furniture and appliances once they’ve moved in, according to Epsilon’s 2015 New Mover Report.
To capitalize on the rise in residential real estate activity, which involves buyers trading up to larger homes, Furniture World recommends that furniture makers connect with new home owners in their communities through targeted marketing immediately after their move-in date to establish their brand.
Industry Impact — Furniture manufacturers should expect rising demand for furniture throughout 2016, particularly across the South, as single-family housing starts reach double-digit growth and more home buyers trade up to bigger homes.
Tracking the moves of consumer products makers since 2003, Catherine Colbert is a company insights writer and blogger. Before covering companies, she spent ample time in magazine publishing, technical writing, ad copywriting, medical writing, and marketing. Follow her on Twitter.