After a tough 2023, several factors contributed to a slower-than-expected rebound in the Flooring & Interiors market. While inflation has largely stabilized, the Fed’s posture of “higher for longer” meant interest and mortgage rates remained elevated for most of this year, challenging both the new home construction and residential remodel space. In addition, container prices rebounded from last year’s lower levels, adding cost and logistics pressures to importers. We predicted back in April that risks to the industry would peak in the first half of this year, and that appears to have materialized, with most distributors down 5% – 15% in the first half while July began to show incremental volume growth. Commercial interiors fared better this year, with many projects funded and started earlier in 2023 producing revenue throughout 2024.
Impending rate cuts along with pent-up demand in the sector from consumers delaying projects last year and earlier this year, however, point to a strong rebound in 2025. Owners and operators considering tapping the mergers and acquisitions (M&A) market should begin their preparations now, as declining interest rates and a recovering market will create a busy M&A market throughout 2025. Potential sellers, especially small to medium-sized ones, should consider getting out to market early and beating the rush to compete for buyer interest and attention.