Hardwood Floors June/July 2026

By Santo Torcivia

• Interest rates will continue to fall as the Fed reduces the discount rate, improving housing affordability, reducing commodity pricing, and mitigating the impact of tariffs. • Real disposable personal income growth continues to increase and is exceeding the core inflation rate of growth. • Housing starts are increasing as interest rates fall and builders offer interest rate buy-downs and purchase incentives. Single-family home construction is increasing its share of new home construction given that single-family units contain floor area over two times that of multi-family units. • Existing home sales, currently averaging a weak 4 million units annually, are forecasted to return to 5 million units per annum in 2027 as interest rates fall and affordability becomes tenable.

Major uncertainties and risks facing the U.S. economy and this forecast are the impact of the wide-ranging tariffs and the federal government budget cuts and federal labor lay-off initiatives being instituted by the Trump Administration. The tariffs, by far, present the greatest unknowns and the highest risks, including: • Tariffs could create chaos for supply chains, dislocate manufacturing and sales, and kick-up inflation. Also, tariffs could worsen fiscal deficits, adding pressure to long-term interest rates. • The Iran War needs to be settled quickly with no energy supply or political/economic consequences or expansion. • Uncertainty about tariffs and general economic conditions is causing both consumers and businesses to hold back on spending and investment until more clarity is reached. • Inflation remains a threat if current policies to reduce it are unsuccessful. • Unemployment remains stable and positive and will remain that way through 2030.

L6

@hickmanwoods

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