Mohawk's Lorberbaum Offers Industry Outlook at Edge Summit

Aurora, CO, December 19, 2024--During Mohawk’s biennial Edge summit for aligned dealers, which wrapped up last night, chairman and CEO Jeff Lorberbaum offered attendees some perspective regarding the industry and its expected pickup in demand.

Pointing to the Harvard Joint Center for Housing’s prediction of a return to more normalized residential remodeling in the second half of 2025, he reported that mortgage rates are expected to be under 6% by the end of next year, spurring home sales to increase 9%.

With the majority of residential flooring sales tied to the sale of existing homes and the remodeling that typically coincides, Lorberbaum highlighted a few related stats that could bode well for the industry:

* The age of the first-time homebuyer today is 38, and many of those in that generation (Gen X) feel like it's past time to buy a house but are waiting on more favorable conditions.

* In the past 12 months, home equity in the U.S. has risen 8% as the price of houses has gone up.

* The almost $1 trillion in equity averages out to $325,000 in each home-an increase of $130,000 since the pandemic began-or almost 75% of a home's value, the highest since 1958

* The median age of a home today is 40 years.

For the two out of every five homeowners who don't have a mortgage and the many others who have mortgage rates that are historically low, their homes will need to be fixed up if they plan to stay in them. And Lorberbaum noted that the stock markets have performed well for the past few years, growing investment and retirement portfolios, and wages are increasing and should outpace inflation next year.

So far this year, only 25 of every 1,000 homes that are owned in the U.S. have been sold, the lowest rate since 1995, he reported. In addition to falling interest rates, the anticipated uptick in single-family new construction should help increase that number.

“People really want to buy homes; they just need more affordable rates, and they need more housing options in the marketplace,” Lorberbaum said.

New-home construction has lagged since the Great Recession, creating a shortage of an estimated five million homes.

The single-family builder market is expected to increase 5% to 10% next year, he reported. And Lorberbaum noted several potential long-term catalysts for that market, including government proposals to change zoning laws, simplify the permitting process and use federal land to open up more places for building.

Despite the current downturn in the market and many consumers trading down if they’re buying flooring at all, Lorberbaum also noted that specialty retailers still sell three times more flooring than home centers.

“The consumer values the assistance that you give them, the knowledge you have and your expertise to help them choose the right product for their use,” he said. “The industry data continues to show that consumers see you guys as the best, most knowledgeable source for flooring.”

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