Hardwood Floors December 2025/January 2026

Market Matters (Continued)

• Tariff policies and the unknown long-term effects of the imposition of tariffs on foreign imports is a huge risk. Opening of foreign markets to U.S. products likely will only benefit larger firms with trade related infrastructure to handle international trade. • An extended government shutdown will further threaten economic growth, as many government programs run out of funds and federal employees go unpaid. • Other potential threats to the new conflicts in Taiwan with China, the Persian Gulf, or other areas; a major domestic civil disturbance; another global pandemic; a major trade war threatening prices and logistical trains; a natural disaster requiring emergency aid; or other catastrophe. This is a summary of the September 2025 Quarterly Market Monitor Report published by Market Insights LLC. NWFA members have exclusive access to the full report, which provides forecasts and analysis of economic, market, and industry conditions and trends affecting the North American flooring market. The report includes a historical and forecasted volume of dollar sales of total wood flooring (at mill sell price) per metro area and state. Separate reports are available for the United States and for Canada. The availability of the reports on a quarterly basis will provide NWFA members with current data that can help them develop business plans, prioritize inventory, and react to market conditions in a timely manner. NWFA members may download the full report by visiting nwfa.org. U.S. economy include a widening war in Ukraine or Middle East, Given the current situation and likely outcomes, the possibility of a recession is small. Expect 2026 to show improved growth in the overall economic situation as mortgage rates fall and an increase in new home construction results. The rise in housing affordability will further enhance flooring sales. Santo Torcivia is president of Market Insights LLC in Reading, Pennsylvania. He can be reached at 610.927.2299 or storcivia@marketinsightsllc.com.

U.S. CALCULATED RESULTS - YTD 2025 (AS OF JUNE 30)

Product Categories Carpet & Rugs

YTD Estimates

Basis for Estimate

-2.4% -6.4% -4.0% -4.5% -2.3%

USITC Imports & Exports, Market Insights USITC Imports & Exports, Market Insights USITC Imports & Exports, Market Insights USITC Imports & Exports, Market Insights USITC Imports & Exports, Market Insights

Ceramic Tile

Laminate Flooring Resilient Flooring

Wood Flooring

Total Flooring

-3.9%

Weighted Calculation from above results

Source: Moody's Analytics market data, U.S. ITC Imports & Exports, & Market Insights forecast. Note: Year-to-Date = 30-Jun

• Unemployment remains stable and positive and will remain that way through 2030. • The gross federal debt is currently very high at $37.3 trillion, up 37 percent from 2020, and 123 percent of GDP at Q2/2025. • Interest rates are linked to inflation and U.S. bank prime rate remains above 7 percent and is not forecasted to fall quickly. U.S. Real GDP growth will slow in 2025 and 2026 as growth is frustrated by uncertainty regarding the long- and short-term impact of the Trump administration policies (tariffs, taxes, immigration, etc.). The scope of the stated policies of the new administration is so sweeping, if only partly implemented, they could have a major • Housing starts should average 1.37 million units annually (a mediocre rate), but single-family starts are growing, and this will continue to aid some economic growth to the economy. Starts will rise over the later years of the forecast, averaging +1.6 million units per year through 2030 as interest rates fall. Starts increasingly will favor single-family units, which average 50 percent greater floor area over multi family units. • Residential home improvements will be stymied in 2025 as the uncertainty impact of the new federal policies slowly becomes clear. Spending is expected to recover slightly in 2026 before increasing at a moderate rate from 2027 onward and throughout the remaining forecast period. • Consumer spending, although growing modestly, is slowing as many consumers’ finances are being stretched by inflation, high interest rates, and slowing employment growth. • Real personal disposable income will grow at an inflation adjusted annual rate of 2 percent or greater through 2030, largely driven by moderate growth in skilled and technical worker employment increases and general wage growth. • Non-residential building construction will grow throughout the forecast period, especially for education, transportation facilities, health care, lodgings, offices, and institutional building types. Factors threatening the U.S. economy include: • Inflation will continue to be an issue among key commodities for consumers. • Federal debt will exceed $37 trillion for the U.S. by the end of 2025. • Slowing employment growth, the result of government lay-offs and automation among domestic industries, if not offset by jobs created by firms onshoring, new investments in domestic production, and consumer spending, will slow economic growth. impact, either positive or negative on the U.S. economy. Key assumptions and issues affecting the U.S. economy:

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