Premium products, area rugs & tech-enhanced portfolios keep category afloat
By Mallory Cruise-McGrath

Despite two years of relative stability, carpet and area rugs continue to cede share to hard surface flooring. According to Catalina Research, manufacturer dollar sales were $11.5 billion, down 1.9 percent from 2024. Soft surface’s share now represents 37.3 percent in dollars, down from 38 percent in 2024.

But while 2025 marks four straight years of continued decline for soft surface, after the boom felt in 2021, there are bright spots. Companies continue to invest in their soft surface portfolio — introducing new technologies to enhance comfort underfoot, durability and cleanability — and consumers positioned at the higher end of the market are still buying better goods.

Driving Factors

In 2025, high interest rates continued to plague the U.S. housing market, explained T.M. Nuckols, president of residential, The Dixie Group (TDG). “Home resales remained at a historic low and new construction was sluggish. Tariffs, global unrest and the geopolitical landscape were also factors,” he said. “In the face of all these issues, many would-be consumers continued to defer flooring and carpet installations.”

Two forces are driving the decline in soft surface flooring: the economy and the continued loss of home share to hard surfaces, said Jamie Welborn, vice president of residential carpet, Shaw. “Housing affordability is the bigger of the two. When housing starts slow, the effect cascades and buyers stay put in homes they aren’t ready to renovate, and renters extend their leases rather than move,” he said. “Layer on shrinking discretionary income, and even a modest remodel becomes harder to justify. Hard surface gains have slowed relative to soft, but the shift is still pulling soft surface sales down.”

The same factors affecting the entire flooring industry are impacting soft surface — slower housing activity, higher interest rates and cautious consumer spending, said Southwind president and CEO Drew Hash. “Hard surface continues to capture a larger share of remodeling projects, but carpet remains an essential category where comfort, acoustics and value matter most,” he said.

Interest rates continue to have a negative impact. “People aren’t moving because of high interest rates and homes being too expensive,” said Eric Ruppert, vice president of soft surface product development and marketing, Engineered Floors (EF). Additional geopolitical factors, such as the war in Iran, and their impact are also influencing consumer spending. “Gas prices [are rising] and there’s less discretionary spending, less growth of income; people aren’t buying flooring in general. The pie for carpet continues to dwindle and we need to plug the leak.”

Due to higher prices, many homeowners delayed moving or postponed remodeling projects, offered Megan Black, senior product manager, soft surface, Tarkett Home. “Although it won’t happen overnight, we are cautiously optimistic about seeing steady improvement for residential flooring over the next 12 months. We are encouraged by the early signs that interest rates will continue to trend downward, resulting in some of the pent-up demand for residential flooring finally starting to break loose,” she said. “Consumers who have put off moving to a new home or completing remodeling projects in their current home are starting to re-engage, and as interest rates continue to decrease, we anticipate that momentum to grow.”

Consumers remain cautious with larger purchases, and housing activity continues to affect flooring demand, said Monty Rathi, COO, Kaleen. “The positive is that this environment is pushing the industry to become more focused, more creative and more responsive to what customers truly want,” he said.

Premium Positioning

While manufacturer dollar sales were down 1.9 percent from 2024, square foot sales dropped 2.2 percent to 10.6 billion square feet, Catalina Research reported. Soft surface flooring now represents 42.1 percent of total square foot sales, down from 42.5 percent in 2024.

This category nuance — square foot sales being down more than dollars — is important, explained Jared Coffin, vice president of product management, soft surface, Mohawk, because it indicates a shift to the upper end of the market.

“Consumers are shifting up market a little bit, especially in residential replacement,” he said. “Carpet is room by room and customers are putting in better products. They’re putting in more patterns, more color. There’s fewer yards but the dollars are more stable than the square yards.”

While every channel, — retail, builder and multi-family — has its own challenges, the trade-up segment (above $16 per square yard wholesale) is thriving, said Shaw’s Welborn. “When consumers do decide to spend on flooring, they’re willing to spend on quality.”

Indeed, TDG’s Nuckols stressed, there is a clear bifurcation of the market. “At the commodity end, carpet often becomes a price-driven purchase. At the premium end, however, consumers are looking for products that help define a space and reflect their personal style,” he said. “Consumers who are investing in higher-end homes, remodels and custom interiors continue to place tremendous value on color, pattern, texture and personalization.”

Strength in the high end encouraged EF to invest in launching heavier weights this year. “Previously, we wouldn’t have launched anything over 80oz but this year we have three styles that are 90oz and they’re outselling, yardage wise, the 60oz products,” said Ruppert.

But while the higher end market is healthier, Coffin emphasized, “It’s still not rosy but it is healthier. There’re fewer consumers in the stores than everybody would like but people with money are more likely to spend it nowadays.”

Area Rugs & Areas of Opportunity

Area rugs continue to perform well, bolstering the overall soft surface category.

“Area rugs allow homeowners to introduce color, pattern and softness into spaces that may feature hardwood, stone or luxury vinyl flooring,” said Nuckols.

Custom rugs remain one of the strongest opportunities in today’s market as consumers continue to seek personalized, design-driven interiors, offered Christine Zampaglione, vice president of marketing at Stanton. “We’re also seeing continued demand for premium wool products, patterned carpets and statement stair runners that allow homeowners to express their personal style.”

Along with custom rugs, higher-end residential projects and design-driven broadloom remain strong bright spots, said Kaleen’s Rathi “Customers are looking for products that feel personal, perform well and bring warmth and character to a space.”

Replacement remodeling remains the strongest driver for soft surface, particularly in bedrooms and living spaces where comfort is a priority, said Southwind’s Hash.

In fact, shared Zampaglione, remodeling projects continue to outpace new construction, with homeowners investing in spaces that improve comfort and livability. “Consumers increasingly view flooring as a design element rather than simply a functional purchase, creating opportunities for retailers to showcase soft surface products that offer texture, warmth and visual impact.”

Modular carpet too is a silver lining for the category, according to Hash, who said it is “driven not only by continued adoption in Main Street and workplace environments, but increasingly in residential applications where consumers appreciate its design flexibility, ease of installation and the ability to replace individual tiles if needed.”

Investments in technology have allowed suppliers to address preconceived notions specifically when it comes to cleanability, healthy homes and indoor air quality. “The relaunch of the SmartStrand Color wall with Pure Ease Anti-Allergen Technology has been a bright spot for us,” noted Coffin. “It’s changing some of the historical talking points around carpet where you can make it more about health, well-being and creating a comfortable environment.”