On September 18, the Federal Reserve enacted its first interest rate reduction in four years, surprising some economists with a substantial half-point cut. This decision is expected to have several impacts on consumers. Mortgage rates are likely to decrease, potentially making home purchases more affordable. Savings rates may drop, affecting returns on deposit accounts. Credit card holders could see a slight reduction in their interest payments. These effects highlight the far-reaching influence of Federal Reserve policy on everyday financial matters.
What does it mean for flooring?
“For most flooring businesses, 2024 is largely set, as the impact of rate cuts will lag and we won’t see much real effect to interior services until next year,” said Aaron Toomey, managing director an investment firm Anchor Peabody. “Still, lower interest rates could provide a near-term benefit to the remodeling sector as home equity lines of credit will be less expensive and, if mortgage rates continue to fall, we may see an incremental bump in existing home sales, which drive a lot of remodel activity.”
Toomey said the builder business should start to make meaningful strides as early as 1Q next year and will likely continue to improve throughout 2025. For the builder business, while a rate cut was fully anticipated, the market was uncertain of the size.
“The Fed came in on the higher end at 50bps (vs. the more conservative 25bps cut some were anticipating),” Toomey said. “This cut, along with any further cuts later this year and early next, should buoy the new home construction market going into next year as financing becomes more affordable and builders are already underway in many markets.”
Flooring companies have weathered a long history of economic and political ups and downs. Our October issue covers a lot of ground.
This month, I had the honor of interviewing Dan Frierson, chairman and CEO of The Dixie Group. Navigating nearly six decades of industry upheaval with a steady hand and an eye for innovation, Dan Frierson's journey from yarn to luxury carpets embodies the transformative power of adaptable leadership in the ever-evolving world of floor coverings.
Starnet President and CEO Mark Bischoff shares the cooperative’s formula for success. Did you that more than 75% of Starnet member companies have been in the flooring business for more than 25 years?
For retail showrooms, we have two stories of interest: innovations in kitchen and bath and a solution to price your showroom more efficiently with QR codes.
On the installation front, we have a fun editorial takeover this month. The talented crew at Ballin Knows Best puts their spin on content for installers by installers for installers. Scott Carothers, educational director for the Ceramic Tile Education Foundation, also continues his Tile Tip series with some nuance—how to angle your trowel.
