Industry faces decline in 2023 after years of growth

U.S. floor coverings sales declined in 2023 after two years of relatively strong growth, according to Catalina Research. Rising interest rates resulted in a declining housing market which caused flooring purchases to drop. Total U.S. housing demand (resales, new starts and manufactured home shipments) decreased 28.6 percent between 2021 and 2023 as mortgage interest rates surged by 129.4 percent. Housing demand drives floor covering spending since some 60 percent of the total market comes from homeowner and builder purchases. Meanwhile, commercial market sales opportunities remained on an upward trend since nonresidential building construction spending continued to increase at double-digit rates. Commercial market growth, however, could not offset the decline in residential markets.

These trends caused the value of U.S. floor coverings manufacturer sales (shipments minus exports plus imports) to decline by 7.4 percent to $34.1 billion in 2023. Square foot sales could have dropped 5.3 percent as average manufacturer selling prices decreased by 2.4 percent. Average selling prices declined as flooring demand weakened and buyers shifted their preference to lower priced products as inflation cut into their discretionary spending.

The sales decline was most severe in the consumer market. The direction of the consumer market depends on existing home sales, and existing home sales declined by one-third between 2021 and 2023. The 9 percent decline in housing starts put additional downward pressure on U.S. floor coverings demand.

Manufacturer sales weakened further as inventories were cut throughout floor coverings distribution channels. This trend can be seen in the sharp drop in import shipments since imports captured about 40 percent of total U.S. dollar floor coverings sales in 2023. Imports declined by 22.3 percent in dollars, and 6.6 percent in square feet. The shift to lower-priced flooring is reflected in the 14.2 percent drop in average import prices.

The sales decline was experienced in every industry segment in dollars, even the once soaring luxury vinyl tile (LVT) market. LVT did gain some share in 2023 since dollar sales could have declined by 7.2 percent, while square foot sales ticked up by 0.1 percent. The smallest dollar sales decline occurred in the ceramic and porcelain tile sector due to relatively strong price increases. Soft surface flooring was also able to make some inroads in 2023, which is not unusual when the overall floor covering market weakens. Soft surface flooring declined at a slower rate in dollars as consumers shifted to this low-cost flooring sector. In 2023, soft surface sales received a boost from an increase in carpet tile and auto and aircraft carpet sales since commercial sales and transportation equipment production increased last year. Sales of non-vinyl resilient flooring, such as linoleum and rubber flooring, also increased in square feet in 2023 since these products are also heavily used in commercial markets.

Carpet & Area Rugs

Soft surface flooring was able to gain share in 2023 on a dollar basis, halting a 25-year decline. Soft surface flooring usually gains share as buyers shift to lower-priced flooring during periods of declining demand. In 2023, carpet and area rug dollar sales could have declined by 7.1 percent versus an industry average of 7.4 percent. Sales could have been $11.4 billion or 33.3 percent of total U.S. floor coverings dollar sales. This is slightly up from a 33.2 percent share in 2022. The dollar share was able to rise since average soft surface manufacturer selling prices were flat while declining for hard surface floorings. Dollar share, however, is down from 52.7 percent in 2012.
Conversely, square foot sales lost ground as wall-to-wall carpet was hurt by the sharp drop in consumer purchases, the most important market for wall-to-wall carpet. Wall-to-wall carpet also represents more than 50 percent of total carpet and area rug sales. Area rug sales also remained on a downward trend. Square foot sales could have declined by 7.4 percent to 10.9 billion square feet or 39.5 percent of total floor covering square foot sales. This down from a 40.4 percent share in 2022 and a 58.3 percent share in 2012. Growing demand for carpet tile and auto and aircraft carpet kept square foot sales from declining at an even sharper rate.

Ceramic & Porcelain Tile and Stone

Ceramic and porcelain tile also gained share on a dollar basis due to relatively strong prices. Dollar ceramic and porcelain tile manufacturer sales decreased only 3.5 percent in 2023 to $4.3 billion. This accounted for 12.6 percent of total U.S. floor coverings sales. Ceramic and porcelain tile represented 12.1 percent of total sales in 2022. Dollar sales benefited from average manufacturer selling prices increasing 4.6 percent. Meanwhile, square foot sales could have declined 7.5 percent to 3.1 billion or 11.4 percent of total square foot sales. This is down from a 11.6 percent share in 2022. Square foot sales were hurt by this sector’s above average reliance on residential markets. Some 56.6 percent of total dollar sales are made to homeowners and builders, the weakest floor coverings markets in 2023.

Price increases were sharpest among domestic manufacturers. U.S. producers, however, were able to take significant share from foreign-sourced products in dollars and square feet. Domestic-made ceramic and porcelain tile could have represented 40.6 percent of total U.S. dollar sales and 36.6 percent of total square foot sales. This is up from 34.1 percent and 36 percent, respectively, in 2022. In 2023, square foot sales of U.S.- made ceramic and porcelain tile could have increased by 13.8 percent, while average selling prices could have increased by 21 percent. On the other hand, square foot ceramic and porcelain tile imports dropped by 8.3 percent, while average selling prices decreased by 5.2 percent. Domestic shipments took share over the past two decades as U.S- and foreign- based manufacturers invested in new domestic production capacity.

U.S. manufacturers are also taking share by taking advantage of consumers’ increasing preference for higher priced products. Demand is growing for large format tile, wall tile and countertops. In addition, digital and 3D printing technologies allow for the development of higher and intricate textures which led to more realistic wood and stone designs. Homeowners are also using higher end tile to unify inside and outside spaces, a trend that started during the pandemic.

Stone tile continue to lose share to ceramic and porcelain tile on a dollar basis due to stone tile’s higher prices. In 2023, stone tile could have sold by almost four times ceramic and porcelain tile prices. Ceramic and porcelain tile also made inroads since digital printing allowed manufacturers to offer stone looks at a lower cost. As a result, dollar stone flooring sales could have declined by 4.8 percent versus a 3.5 percent decrease for ceramic and porcelain tile. Square foot stone tile sales, however, could have declined by 6.1 percent since average selling costs increased only 1.3 percent in 2023.

Wood Flooring

The wood flooring sector experienced some of the sharpest sales decline in the industry in 2023. Wood flooring dollar sales could have declined by 10.6 percent to $4.1 billion. Square foot sales could have dropped by 12.7 percent to 1.4 billion. In 2023, wood flooring’s share of total floor covering dollar sales could have been 11.9 percent and 5.0 percent of total square foot sales. This is down from 12.4 percent and 5.4 percent, respectively, in 2022.

Wood flooring has a much higher share in dollars since wood flooring sales are at the higher end of the floor coverings market. This hurt square foot sales as consumers sought out lower end products due to inflationary pressures moving through the economy. Wood flooring also has above average dependence on the builder and residential replacement markets. Wood flooring sales were especially hurt by the nearly 19 percent drop in existing home sales, which is the major driver of homeowner flooring replacement projects.

Manufacturers and marketers also continue to see increased competition from rigid core luxury vinyl tile (LVT), which is a direct competitor to engineered wood flooring. Competition from LVT has primarily affected the lower end of the market. This resulted in higher average manufacturer selling prices. Domestic manufacturers, however, may have received a boost to their bottom line in 2023 as average selling prices increased and lumber costs declined sharply.

In addition, U.S. manufacturers were able to gain share from foreign sourced products. In 2023, U.S. manufacturers’ square foot sales could have declined by about 3 percent versus a 28.5 percent drop for imported products. Average import prices also decreased. As a result, U.S.-made wood flooring could have captured 72.1 percent of total domestic wood flooring dollar sales in 2023. This is up from a 64.5 percent share in 2022.

U.S. manufacturers have taken share from Chinese manufacturers in recent years due to the imposition of 301 and anti-dumping tariffs. In June 2023, the U.S. International Trade Commission decided to continue the existing anti- dumping and countervailing duties for another five years.

Resilient Flooring

Resilient flooring’s run as the growth leader on a dollar basis ended in 2023 due to weak prices. However, the sector continued to make inroads on a square foot basis due to LVT’s ability to eke out an increase in square foot sales. In 2023, dollar resilient flooring sales could have declined by 8.3 percent as average manufacturer selling prices dropped by 7.2 percent. Dollar sales dropped to $11.3 billion or 33 percent of total floor coverings sales. Meanwhile, square foot sales decreased only 0.8 percent to 11 billion or 39.7 percent of total square foot sales. Resilient flooring’s share of total floor covering sales was only 12.8 percent in dollars and 16.7 percent in 2012.

The sharp inroad over the past decade reflects rising demand for rigid core LVT, including WPC and SPC technologies. LVT, however, was not spared by the overall weakness in U.S. floor coverings demand in 2023. In 2023, LVT dollar sales could have declined by 7.2 percent, with square foot sales increasing by 0.1 percent. LVT, however, took additional share. LVT could have accounted for 27.6 percent of total floor covering dollar sales and 30.9 percent of total square foot sales. This is up from 27.5 percent and 29.3 percent, respectively, in 2022. LVT’s share was only 3.7 percent in dollars and 3.8 percent in square feet in 2012. LVT took share from other floor covering sectors and other vinyl tile and sheet over this period.

Sourcing, however, has been shifting in recent years led by a 38.6 percent decline in dollars imports from China in 2023. Chinese imports declined in recent years due to 301 tariffs on Chinese-made flooring. In 2023, the enforcement of the Uyghur Forced Labor Production Act further cut into sourcing from China, especially of PVC-based flooring, since the Act prohibits imports of goods produced in the Xinjiang region of China. Imports from Vietnam, South Korea and Taiwan also declined sharply in 2023. On the other hand, sourcing from Mexico and Thailand increased sharply. U.S.-based manufacturers were able to gain share due to investments in new LVT production capacity. Investments were made to offset tariffs on Chinese-made flooring and supply chain bottlenecks, as well as to better respond to U.S. consumer demand and preferences.

Laminate Flooring

Laminate flooring is another sector hurt by its heavy dependence on a weak replacement market and continued growing competition from rigid core LVT. The U.S. supply (shipments plus imports) could have declined by 9.7 percent in dollars and 12.2 percent in square feet in 2023. Sales could have been $1.1 billion and 840 million square feet. Laminate flooring could have accounted for 3.3 percent of total dollar sales and 3 percent of total square foot sales. Share was 3.2 percent and 3.3 percent, respectively, in 2022. Average manufacturer selling prices could have increased by 2.4 percent, which cut into this sector’s competitive position with rigid core LVT.

Meanwhile, U.S. manufacturers could have gained share on a dollar and square foot basis in 2023. U.S.-made laminate flooring square foot shipments could have increased 7.3 percent in 2023. Meanwhile, square foot imports are estimated to have dropped by 30.9 percent. As a result, U.S.- made laminate flooring could have accounted for 59.7 percent of the total U.S. square foot supply in 2023. This is up from a 48.9 percent share in 2022. U.S. manufacturers took share since they have been expanding domestic production capacity and becoming more price competitive with foreign-sourced products. Domestic manufacturers are also improving designs and features to stimulate demand.

Editor’s Note

As data is updated year over year, some numbers here reflect revised values for 2022. All sales values are in manufacturers’ dollars.

Outlook 2024

The U.S. floor coverings industry could experience another down year during 2024 due to continued weakness in the residential replacement market. The decline, however, could moderate due to stronger builder demand. Commercial market sales are also estimated to remain positive. The sales decline, however, is expected to be at a slower rate. Dollar floor covering manufacturer sales are estimated to decline by 2 percent to $33.4 billion. Square foot sales could decrease by 0.6 percent while average manufacturer selling prices could increase by 1.4 percent.

The decline in existing home sales continue to weigh on consumer spending. Existing home sales is the primary driver of residential replacement projects. The sales of an existing home is likely to stimulate a homeowner floor coverings replacement project in the following six to 12 months. Therefore, the 18.7 percent drop in existing home sales in 2023 could result in a 5.7 percent decline in consumer floor coverings purchases. In addition, with interest rates remaining near the 7 percent level in 2024, there is little chance of a consumer spending recovery this year.

However, the builder market is strengthening. The upturn is centered in single-family homes with starts increasing close to 26 percent over the first four months of 2024. This will offset the 14 percent decline in multifamily starts. Meanwhile, the total square foot built during 2024 is estimated to be about 13 percent since a new single-family home is more than twice the size of a new multifamily housing unit. As a result, builder flooring purchases could increase by 6.8 percent in 2024.

Meanwhile, nonresidential building construction spending continues to increase at double-digit rates. Spending growth, however, is down one-third over the first four months of 2024 compared to the same period of the previous year. As a result, commercial market sales could increase by 4.2 percent in 2024. Growth will be led by segments supported by government spending in healthcare, education, public safety and certain manufacturing industries. Purchases by transportation equipment manufacturers could also continue to grow due to a 4.7 percent increase in transportation equipment production over the first four months of 2024.

The LVT and ceramic and porcelain tile sectors are expected to make further inroads in the floor coverings industry during 2024 due to the rebound in builder purchases and continued increases in commercial market sales. Wood flooring sales will also receive a boost from the strengthening of the builder market. Non-vinyl resilient flooring and carpet tile will benefit from positive gains in commercial sales, while auto and aircraft carpet sales will grow along with the increase in transportation equipment production. On the other hand, demand for wall-to-wall carpet, area rugs and laminate flooring will be hurt by their relatively heavy dependence on the sluggish residential replacement market.