[Delray Beach, Fla.] Catalina Research has released its latest Floor Coverings Industry Quarterly Update. According to the report, U.S. floor coverings dollar sales (shipments minus exports plus imports) growth has been increasing at double-digit rates in the first half of 2022. Growth reflects strong price increases as manufacturers pass through rising material, labor and transportation costs. Growth rates, however, are only half of those for 2021, as the economy recovered from the pandemic-induced recession. Square foot growth rates slowed more significantly as rising interest rates cut housing demand. In addition, consumer sentiment plummeted as fear of inflation and recession rose.

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Dollar manufacturer sales could have increased by 10.7 percent in the first half of 2022. This is down from a 21.6 percent gain for all of 2021. Square foot sales could have increased by only 3.8 percent in the first half, down from a 13.8 percent gain in the previous year. Dollar sales received a boost from a 6.5 percent to 7 percent increase in average manufacturer selling prices. These are some of the sharpest industry price increases in decades.

Floor coverings prices are increasing sharply, while household income declines as government stimulus ends. Rising interest rates are also causing existing home sales to turn downward. These trends caused consumer spending to slow. Factoring out price increases, consumer square foot purchases growth could have been in the low single-digits in the first half of 2022. Builder purchases are also slowing as the rise in interest rates cause new home permits and starts to flatten out. As residential markets slow, floor coverings manufacturers and marketers are looking to a recovering commercial market for the first time since 2019. Commercial selling opportunities are currently increasing at the sharpest rate in the retail, education, amusement and manufacturing facility markets.

No matter the end-use market, growth in the first half of 2022 was led by gains in the resilient and wood flooring sectors. These sectors were also the growth leaders in 2021. Catalina estimates dollar sales increased by 34.7 percent in the resilient sector in the first half of 2022, while increasing by 16.3 percent in the wood flooring sector. The resilient flooring sector is the only flooring sector to grow at an even sharper rate in the first half of 2022 than for all of 2021. The resilient floor sector continues to benefit from soaring LVT demand. Wood flooring made inroads due to strong price increases driven by rising lumber prices.

On the other hand, the carpet and rug sector continued to lose ground as the popularity of wall-to-wall carpet declines. In fact, carpet and rugs was the only sector to experience a decline in dollar and square foot sales in the first half of 2022. As a result, carpet and rug’s share of total U.S. floor coverings sales is nearly half the level captured in the early 1990s. Ceramic and stone tile demand also weakened during 2022 as housing demand declined. Meanwhile, the laminate flooring sector was able to gain some share in square feet in the second quarter due to sharp import shipments.

U.S. floor coverings sales are forecast to slow further over the next few quarters as mortgage interest rates approaches or tops 6 percent and recession fears reduce consumer confidence. Catalina estimates dollar floor covering manufacturer sales could increase in the mid-to-high single digits in the second half, while square foot sales could be flat by the end of the year. Final demand, however, could turn negative in the fourth quarter as rising interest rates cause housing demand to drop at double-digit rates. This will cause inventories to accumulate at manufacturers, distributors and retailers, which could cause manufacturer sales turn negative in 2023.

For more on this report and others from Catalina Research, visit http://www.catalinareports.com/.