Mortgage rates fell below 6% in late February. How significant was that drop? It’s the first time in three and a half years that rates on 30-year fixed mortgages fell below that threshold. Rates briefly rose again on March 2 in the wake of the conflict in Iran, (as of press time, mortgage rates are hovering just over 6% for fixed 30-year mortgages), but some dealers say the trend toward lower rates combined with the improving availability of homes for sale are positive signs for a flooring industry that has been mired in a housing slump for a few years.
“I believe a sub-6% interest rate has a meaningful impact on consumer confidence and overall market activity,” said Bob Pireu, co-owner of Bob & Pete’s Floors, Canton, Ohio. “When rates drop below that threshold, you typically see increased movement in the housing market, which is obviously beneficial for our business and the broader home furnishings industry. We tend to benefit in two primary ways: first, from homeowners preparing their properties for sale and investing in updates to maximize value; and second, from buyers who have just purchased homes and are eager to personalize and upgrade their spaces. Both segments are areas where we’re heavily involved and generate a significant portion of our annual business.”
Dealers say lower rates help stimulate consumer confidence, which in turn can kick-start economic activity. When those factors begin working together, it creates positive momentum for housing and, hopefully, flooring sales.
Some dealers are already seeing housing market activity pick up in 2026. A case in point is The Vertical Connection Carpet One Floor & Home in Columbia, Md. “It’s hard to say whether that’s related to rates or the typical seasonality,” said owner Adam Joss. “But I’m very optimistic that rates below 6% will spur the housing market. Additionally, the further removed we get from sub-4% rates, the more normal today’s rates will be.”
Doug Peeples, manager of Myers Flooring in Nashville, Tenn., said he sees the downward trend in mortgage rates as a positive sign that business is poised to break out. “We haven’t seen a huge surge yet, but I think it will help get some fence-sitters off the fence as we head into spring,” he said. “Our primary customer is residential remodel so the rate may not have much of an influence on that business, but the custom home builder may see this as a good sign.”
While sub-6% rates is an improvement, a few retailers think rates will have to go lower to have a lasting effect. “With what homes cost today, coupled with high insurance rates and property taxes, in order for more people to afford the monthly payments of a new home, interest rates will have to get to at least 5.5%,” said Ted Gregerson, president of Ted’s Floors & Beyond, Anniston, Ala. “I believe in the next 12 to 18 months we will see mortgage rates get somewhere between 5% to 5.5%. Interest rates have come down. However, to see a true impact on our business, I believe they have got to get in the lower 5% range. When it does, that is when we will see houses selling again at a rate that will have a noticeable impact.”
There are still macro concerns that go beyond U.S. mortgage rates. While hailing sub-6% as “great news,” retailers are acutely aware of the strife in the Middle East and the impact it may have here, including the potential for ongoing high inflation and continued purchasing slowdowns. “We are now in a more volatile situation with the war in Iran that will continue to add concern to the average buyer,” said Cathy Buchanan, co-owner of Independent Carpet One Floor & Home, Westland, Mich. “Whether it be for a new home or any form of home improvement I seriously think people will be holding onto their money with concern of where this new ‘war’ will leave us.”
