Lorberbaum Offers 2023 Outlook at Edge Summit
Nashville, TN, December 14, 2022-Jeff Lorberbaum, CEO of Mohawk, spoke to the 800 retailer attendees at the Nashville, Tennessee Edge Summit.
Lorberbaum expects the residential market to soften with the economy in 2023 with greater variation from region to region, as some regions experience greater population growth, some recover from natural disasters, and others experience higher levels of renovation activity.
He noted that in 2021, unit sales were the highest-ever for the flooring industry, up 14%, with higher selling prices increasing growth by another 7%. He expects 2022 to fall a little short of that, and for unit volumes to further decline by mid-single digits in 2023-but notes that these declines are from an all-time high.
Lorberbaum predicts that flooring retailers will continue to see less foot traffic in first half of 2023 but notes that those who come will be ready to buy.
As for the big picture, the “new normal” of the economy has been somewhat unexpected. Due to government spending, the economy bounced back from the pandemic halt more quickly than expected, but this also resulted in higher inflation and interest rates as well as a yo-yoing stock market.
Due to current levels of inflation, large discretionary purchases like flooring are being deferred by many homeowners. However, the Federal Reserve’s goal to tamp inflation down from 9% to 2% seem to be working, though it will take around 18 months to see the full effect. Lorberbaum hopes to see inflation begin to reverse course in 2023.
As for the housing market, the U.S. is still short five million homes, and half of all existing homes are more than 50 years old with another 20 million between 20 and 40 years old. Many of these will require updates to finishes to maintain their values.
While the housing market has cooled from its pandemic fervor, there was not a bubble as the market experienced after the Great Recession. And with many homeowners locked in to low mortgage rates and equity high, it only makes sense for them to renovate.
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