At a Glance:
- Smith Leonard’s Furniture Insights Report shows 2025 furniture orders in the U.S. finished flat with 2024 levels.
- Shipments declined 1% year over year in 2025, with December shipments remaining flat month over month.
- Tariff shifts and economic pressures, including the Iran war and consumer confidence changes, affected the furniture industry.
HIGH POINT — The U.S. residential furniture industry closed out 2025 with relatively stable demand but modest shipment declines, according to the latest Furniture Insights Report from accounting and consulting firm Smith Leonard.
New orders among survey participants finished the year flat with 2024 levels, excluding the effects of tariffs and inflation, while shipments declined slightly, highlighting a year marked by economic uncertainty and supply chain adjustments.
In December, new orders fell 11% from November, a decline the report attributes largely to normal seasonal slowdowns during the holiday period. Despite the month-to-month drop, December orders were up 1% compared with December 2024.
See also:
Shipments in December were flat compared with both the prior month and the same month a year earlier. For the full year, shipments ended 2025 down 1% from 2024 levels.
Backlogs continued to soften slightly, falling 1% from November and 2% compared with December 2024.
Receivables and inventories moved in opposite directions during the month. Receivable levels dropped 11% from November and were down 9% from a year earlier. Inventories, meanwhile, remained flat month over month but were up 4% compared with December 2024.
Ongoing resilience
Employment indicators showed modest changes as well. Payrolls declined 3% from November but were still 5% higher than in December 2024, while overall employee levels remained generally consistent with recent months and the prior year.
Smith Leonard said the year’s results reflect a market that remained resilient despite a range of economic and geopolitical pressures.
“Certainly not what people were hoping for coming into 2025, but perhaps a relative win in light of the challenges presented by the year’s disruptions,” the report stated.
Among those disruptions were ongoing tariff shifts affecting imported furniture and raw materials. The report noted that the Supreme Court of the United States recently struck down tariffs imposed under the International Emergency Economic Powers Act, although those duties were quickly replaced with temporary tariffs of roughly 10% to 15%.
Those temporary measures are generally lower than earlier tariff levels — particularly for Asian sourcing markets — but the situation remains fluid as the industry awaits longer-term policy decisions.
Smith Leonard said the shifting tariff environment is creating operational challenges for manufacturers and importers who must continually adjust pricing structures and cost assumptions ahead of upcoming industry buying cycles, including the April furniture market.
Beyond tariffs, broader economic conditions continue to shape industry outlook.
Consumer sentiment showed a modest improvement in February, according to data from The Conference Board. Its Consumer Confidence Index rose 2.2 points to 91.2 after declining in January.
“Confidence ticked up in February after falling in January, as consumers’ pessimistic expectations for the future eased somewhat,” said Dana M. Peterson, chief economist at The Conference Board.
Despite the increase, the index remains well below its recent peak of 112.8 recorded in November 2024, and consumer commentary continues to highlight concerns about inflation and the cost of goods.
Big-ticket demand ticks up
Even so, consumer plans to purchase big-ticket items increased in February, with furniture among the categories seeing stronger interest for purchases over the next six months.
Housing activity — a major demand driver for furniture — showed mixed signals at the start of 2026.
Existing-home sales fell 8.4% in January to a seasonally adjusted annual rate of 3.91 million units, according to the National Assn. of Realtors. Sales declined in all regions compared with the prior month and were down 4.4% year over year.
At the same time, home affordability has improved as wages continue to outpace home price growth and mortgage rates have eased compared with a year ago. The average 30-year fixed mortgage rate was 6.10% in January, down from 6.96% a year earlier, according to Freddie Mac.
New-home sales also showed modest gains year over year. Sales of new single-family homes reached a seasonally adjusted annual rate of 745,000 in December, down slightly from November but 3.8% above December 2024 levels.
Regionally, new-home sales rose sharply in the Midwest and Northeast while remaining relatively stable in the West and slightly lower in the South.
On the broader economic front, U.S. real gross domestic product grew at an annualized rate of 1.4% in the fourth quarter of 2025, according to the U.S. Bureau of Economic Analysis. That marked a slowdown from the 4.4% growth rate recorded in the third quarter.
For the full year, GDP increased 2.2% in 2025, compared with 2.8% growth in 2024.
Cloudy outlook
The report also pointed to the ongoing war involving Iran as a potential economic risk for the furniture sector. While the conflict carries serious humanitarian consequences, Smith Leonard noted that past geopolitical conflicts often have only short-lived impacts on financial markets and consumer confidence.
The more immediate concern for the furniture industry is the potential effect on energy prices and global shipping. Escalating military conflict between the United States, Israel and Iran has already disrupted oil markets and shipping routes in the Middle East, pushing oil prices higher and raising freight costs.
Still, improving housing affordability and declining interest rates could support stronger furniture demand heading into the next year.
“On a brighter note,” the report said, “there is some good news coming out of housing with the affordability index improving across all regions, which coupled with the continued decline in interest rates could drive the increased activity within the industry for 2026 we’ve been looking for.”
