The U.S. furniture industry in 2026 remains challenged by a cautious consumer environment and weak housing activity. Sluggish home turnover continues to delay large furniture purchases, while elevated labor, occupancy and marketing expenses are weighing on profitability for the Zacks Furniture industry players. Furniture manufacturers are also experiencing pressure from higher freight, fuel, energy and raw-material costs. In addition, intense pricing competition and ongoing supply-chain inefficiencies are further pressuring margins, even as tariff-related relief offers only limited support.

Even so, the industry is steadily building a foundation for long-term growth. Companies are focusing on innovation and digital transformation to drive engagement and demand. Greater adoption of e-commerce, AI-led personalization and AR/VR tools is improving the customer experience, while growing preference for multifunctional furniture—particularly among millennials and Gen Z—is shaping product innovation. Strategic acquisitions, partnerships and selective opportunities in the public sector are also enhancing growth potential, with players like MillerKnoll, Inc. (MLKN Quick QuoteMLKN - Free Report) and Flexsteel Industries, Inc. (FLXS Quick QuoteFLXS - Free Report) actively expanding their capabilities and market presence.

Industry Description

The Zacks Furniture industry comprises manufacturers, designers and marketers of residential and commercial furnishing solutions. Some companies provide kitchen and bath cabinets as well as various engineered components and products in the United States, along with international markets. A few industry players also offer specialty rental services, such as modular and portable storage solutions, as well as modular space and portable storage solutions. They are involved in designing and producing a wide variety of engineered components and products for homes, offices and automobiles. The industry players cater to different sectors, namely construction, energy, healthcare, security, government, retail, commercial, education and transportation.

4 Trends Shaping the Furniture Industry's Future

Weak Housing Market & Geopolitical Instability: Weak housing activity remains the furniture industry's biggest challenge. Elevated mortgage rates and low housing turnover continue to limit demand for furniture purchases tied to home sales and relocations. Consumers are also becoming more cautious with discretionary spending amid economic uncertainty, resulting in uneven traffic, inconsistent order patterns and conservative inventory replenishment by retailers. Many households are prioritizing essential expenses over big-ticket purchases such as furniture, keeping industry demand and sales growth under pressure. Ongoing global conflicts have contributed to higher energy prices, transportation costs and economic uncertainty. Furniture companies have reported that geopolitical developments are affecting consumer confidence and financial market stability, creating additional demand pressures. 

Higher Expenses: The industry players are engaged in active competition to enlarge their market share. In pursuit of this goal, industry players are intensifying their digital presence and refining shipping capabilities, leading to heightened investments. Also, the furniture industry is highly competitive, with home furnishing retailers, department stores and antique dealers having a hard time. The companies need to make incremental investments to address an expanding omnichannel environment, as shoppers tend to look for online options. Growth in online sales may continue to dent traditional furniture retailers’ market share as brands such as Etsy, Things Remembered, Costco and Amazon are finding their way into the market. Alongside these challenges, rising SG&A rates, increased labor and occupancy costs, and elevated expenses related to marketing and stores could place a strain on profit margins. The labor market has struggled with the limited availability of labor, which is pushing up labor costs. Cost pressures are expected to remain a key concern in 2026. The industry also continues to face volatility in raw material costs, including wood, foam, metals and fabrics. Furniture companies are experiencing higher transportation and logistics expenses due to rising fuel and energy prices. The industry has indicated that higher energy costs are affecting domestic transportation immediately, while elevated ocean freight expenses could pressure margins in the coming quarters.

The industry players believe that future profitability will depend less on volume recovery and more on operating leverage from leaner cost structures. This reflects a broader industry recognition that pre-pandemic demand levels may not return quickly, if at all, reinforcing the need for resilient business models.

Growth in E-commerce and Digital Transformation: The furniture sector is increasingly embracing digital platforms, with significant investments in e-commerce and technology to enhance customer experiences. Companies are integrating AR and virtual reality (VR) to allow customers to visualize furniture in their spaces before purchasing. Additionally, AI is being utilized for personalized recommendations and inventory management, streamlining operations and improving customer satisfaction. Moreover, as urban living spaces become more compact, there is a growing demand for multifunctional furniture that maximizes utility without compromising on style. Products like convertible sofas, foldable tables and storage-integrated seating are gaining popularity, especially among millennials and Gen Z consumers.

Brand Building, Product Innovation, Commercial & Contract Furnishings Growth: Strong brands remain one of the industry's most valuable assets. Furniture companies are increasing investments in marketing, consumer insights, product development and customer experience initiatives to strengthen brand awareness and attract new customers. New product introductions, refreshed collections and collaborations with designers or influencers are helping companies remain relevant and capture consumer interest. These investments not only support current sales but also position companies to gain market share when industry conditions improve.

Opportunities extend beyond residential furniture. Corporate office renovations, workplace redesigns, hospitality projects, senior living facilities and healthcare construction continue to create demand for commercial furnishings. Improving office leasing activity and return-to-office trends are supporting investment in workplace environments, while growth in hospitality and institutional markets provides additional avenues for expansion. Manufacturers with exposure to contract furnishings are benefiting from a more diversified demand base that is less dependent on residential housing activity.

Zacks Industry Rank Indicates Dull Prospects

The Zacks Furniture industry is a seven-stock group within the broader Zacks Consumer Discretionary sector. The industry currently carries a Zacks Industry Rank #213, which places it in the bottom 14% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bleak near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of a lower earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group’s earnings growth potential. Since March 2026, the industry’s earnings estimates for 2026 and 2027 have decreased to $1.31 per share from $1.43 and $1.63 from $1.71, respectively.

Despite the industry’s blurred near-term view, we will present a few stocks that one may consider adding to their portfolio. Before that, it’s worth taking a look at the industry’s shareholder returns and current valuation.

Industry Outperforms Sector, Lags S&P 500

The Zacks Furniture industry has outperformed the broader Zacks Consumer Discretionary sector but lagged the Zacks S&P 500 Composite over the past year.

Over the past year, the industry has declined 4.9% compared with the broader sector’s 11% decrease. The Zacks S&P 500 Composite has risen 25.2% in the same time frame.

One-Year Price Performance

Furniture Industry's Current Valuation

On the basis of the forward 12-month price-to-earnings (P/E), which is commonly used for valuing furniture stocks, the industry is currently trading at 8.36X compared with the S&P 500’s 21.03X and the sector’s 16.71X.

Over the past five years, the industry has traded as high as 15X and as low as 7.52X, with the median being 10.45X, as the chart below shows.

Industry’s P/E Ratio (Forward 12-Month) Versus S&P 500

Industry’s P/E Ratio (Forward 12-Month) Versus Sector

2 Furniture Stocks to Keep an Eye On

We have selected two stocks from the Zacks universe of furniture stocks that have impressive growth prospects amid volatility.

Flexsteel: Based in Dubuque, IA, the company manufactures, imports, distributes and markets residential furniture across the United States. Flexsteel’s growth strategy remains centered on gaining market share through innovation, strategic customer relationships and product expansion. Management highlighted that strategic accounts, new product introductions and health-and-wellness furniture categories continue to perform well despite a challenging demand environment. The company is investing in consumer insights, product development, marketing and customer experience to strengthen its competitive position and support long-term share gains. Flexsteel also believes its strong balance sheet, disciplined operating model and ongoing innovation efforts position it to capitalize on opportunities as weaker competitors pull back on investments, enabling the company to continue expanding its market presence over time. 

Flexsteel — a Zacks Rank #1 (Strong Buy) stock — has gained 106.1% in the past year. Estimates for FLXS’ fiscal 2026 earnings have increased to $4.78 from $4.65 per share over the past 30 days. FLXS is expected to report 14.6% growth in earnings per share (EPS) in fiscal 2026 on 3.8% higher revenues. Also, FLXS’ earnings topped the consensus mark in all the last four quarters, with the average surprise being 59%. The company’s trailing 12-month ROE is 16.1%, higher than the industry’s 3.5%. It has a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.

Price and Consensus: FLXS

MillerKnoll: Based in Zeeland, MI, this company designs, manufactures and sells office and home furnishings worldwide. MillerKnoll has been benefiting from a combination of expanding retail operations, improving contract-market demand and strong brand positioning. MLKN continues to gain share in the global premium home furnishings market through new store openings, broader product assortments, e-commerce growth and increased brand awareness. Management plans to significantly expand its Design Within Reach and Herman Miller store footprint over the coming years. In the contract business, improving office leasing activity, return-to-office trends and healthy demand from technology, financial and business services customers are supporting growth. It also sees opportunities in underpenetrated international markets, particularly across Asia-Pacific, Europe and the Middle East over the long term.

MillerKnoll — a Zacks Rank #3 (Hold) stock — has lost 10.1% in the past year. The company is expected to report $1.83 of EPS on $3.81 billion of revenues. Also, MLKN’s earnings topped the consensus mark in three of the last four quarters, with the average surprise being 24.5%. It has a VGM Score of B.

Price and Consensus: MLKN