The insight: The US is mired in the “worst housing market in almost 50 years,” RH CEO Gary Friedman said during the company’s Q1 earnings call, as high housing costs and economic uncertainty chill demand.
The landscape: It’s no surprise that consumers are thinking twice about buying a home. While affordability is improving thanks to an increase in available inventory, ownership remains out of reach for the majority of Americans.
- Nearly half (49%) of the general population will or is planning to delay purchasing a home or apartment this year for financial reasons, per CivicScience.
- As of March 2025, households making $50,000 could afford just 8.7% of listings, compared with 21.2% for those with incomes of $75,000 and 37.1% of households earning $100,000, according to an analysis by the National Association of Realtors.
- Even sellers’ willingness to pile on concessions isn’t enough of a motivator: Pending US home sales declined 1.1% YoY in the four weeks ended June 8, Redfin said, underscoring sluggish demand during the typically busy spring selling season.
RH finds a way: Despite the housing headwinds, RH is holding up fairly well. The furniture retailer maintained its full-year forecast, following in the footsteps of other housing-adjacent companies like Lowe’s and Home Depot, thanks to its push to establish itself as a luxury lifestyle brand and European expansion.
RH is also hard at work reducing its exposure to China tariffs: It expects just 2% of Q4 inventory receipts to originate from the country, down from 16% in Q1, and is shifting more manufacturing to factories in North Carolina and Italy.
Our take: With the sluggish housing market showing few signs of improvement, retailers must lean into any pockets of opportunity they find. For RH, that’s burnishing its luxury credentials and pushing deeper into hospitality, while Wayfair is leaning on its diverse supplier base. The resilient pro market is another area companies should look to take advantage of as they try to ride out the downturn.
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