The US furniture sector entered 2026 facing a cautious trading environment, with muted demand, higher inventories and growing cost pressures, according to the latest report from Smith Leonard.
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January new orders rose 1% month-on-month but were flat compared with January 2025, while shipments were unchanged from December and 7% lower year-on-year. Backlogs also remained flat, suggesting limited momentum at the start of the year.
Balance sheet pressure increased across the sector. Receivables climbed 15% from December and were 1% higher year-on-year, while inventories rose 7% month-on-month and 9% annually. Payroll costs increased 8% versus December, although overall employment levels were 2% lower than a year earlier.
Demand conditions remain mixed. Consumer confidence improved slightly in March to 91.8, but future expectations weakened as households continued to weigh inflation, tariffs and geopolitical risks. While furniture remains a key planned spending category, shoppers appear more selective on large discretionary purchases.
Housing data also offered conflicting signals. Existing home sales increased 1.7% month-on-month, helped by improving affordability, while new home sales dropped 17.6% from December and 11.3% year-on-year. As housing turnover is closely linked to furniture demand, the split trend adds uncertainty for retailers and manufacturers.
The report also flagged higher transport and raw material costs, particularly foam, alongside supply constraints linked to wider geopolitical tensions including the Iran conflict.
While some indicators remain resilient, the combination of uneven demand, rising costs and macroeconomic uncertainty points to another challenging year for the US home furnishings market. As the report noted, 2026 may prove to be "another bumpy ride" for the industry.
