Hardwood Floors December 2019/January 2020

MARKET MATTERS INDUSTRY INSIGHTS

U.S. WOOD FLOORING 2020 OUTLOOK: AN UNCERTAIN MARKET ENVIRONMENT BIGSTOCK ©

by 5.7 percent to $3.6 billion. Square foot sales could drop by 10 percent to 1.6 billion. Average selling prices are expected to increase by 4.6 percent. The increased tariffs on Chinese- made flooring could have accounted for about half of the price gain and the other half from the impact of rising lumber costs in 2018. The 2019 price increase was also double the rate for all floor coverings, which cut into the price-competitiveness of wood flooring. Declining sales and increasing prices resulted in wood flooring losing considerable share of the U.S. floor coverings market. During 2019, wood flooring could decline to 12.9 percent of total U.S. floor coverings dollar sales, and 6.7 percent of total square foot sales. This is down from 17.2 percent in dollars and 8.9 percent in square feet in 2015. Wood flooring primarily lost share to rigid core LVT as LVTmanufacturers introduced innovative WPC and SPS flooring with wood looks. During 2019, LVT sales could increase by 28 percent in dollars and 23.2 percent in square feet. These gains will push LVT’s share to 16.4 percent in dollars and 13.3 percent in square feet. This is up from a 5.5 percent to 6 percent share of total floor coverings dollar and square feet sales in 2015.

Wood flooring manufacturers and marketers face another challenging year in 2020. Some of the same factors causing wood flooring demand to decline during 2019 will continue into 2020. Manufacturers and marketers continue to see rising competition fromwaterproof rigid core luxury vinyl tile (LVT). Increased tariff charges on Chinese-made wood flooring is also putting pressure on prices. These trends contributed to declining U.S. wood flooring sales (shipments minus exports plus imports) during 2019. However, green shoots are beginning to emerge. The most important trend has been the decline in interest rates. Lower interest rates have already given a boost to the U.S. housing market. Lumber costs are also declining, which could reduce pricing pressures and make wood flooring more price-competitive to other flooring products. In addition, wood flooring manufacturers have introduced more water-resistant products to compete with rigid core LVT. These positive trends, however, may not be enough to pull wood flooring sales out of their current funk. During 2019, wood flooring sales, in manufacturer dollars, could decline

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