Back in December 2025, mill executives predicted that 2026 would be carpet’s turn to make hay—that after several years of inflation, high interest rates, a stagnant housing market, shifting consumer spend and tariff impacts, the soft surface segment would be back in the black with a small percentage increase in dollars.
Eight months later, that optimism has turned to the sobering reality that 2026 will likely be another down year for the residential carpet segment. It’s not because today’s carpets aren’t better than ever, because they are. But when data strongly suggests the desultory housing market will continue, there is not much that executives can do.
For now, it’s grin and bear it. Consider these sobering numbers: In December 2025, the national average 30-year fixed mortgage rate hovered around 6% to 6.18%; the averages for today, August 2026, have climbed to approximately 6.72% to 6.79%. After briefly dipping below 6% in late February, mortgage rates have been on the upswing. What’s more, the annual U.S. inflation rate was 2.7% in December 2025, compared to 3.4% as of July 2026, according to the latest U.S. Bureau of Labor Statistics report down from 3.5% in June.
In a nutshell, it’s no wonder that residential carpet is staring at another disappointing year. “The same issues from the last few years continue to plague the business…high interest rates, low existing home sales and plenty of geo-political unrest to go around,” said T.M. Nuckols, president of the residential division of The Dixie Group. “The result? Many would-be consumers continue pushing the pause button on flooring projects.”
Nuckols’ estimate is the residential carpet segment is somewhere in the -2% to 0% (flat) range vs. last year. “But keep in mind,” he said, “even if the market is flat, business is still not strong…we are nearly 30% below the peak five years ago.”
While acknowledging the market is down vs. last year, James Lesslie, president/COO of Engineered Floors offered, “There were some positive trends in the second quarter [of 2026]. With the inflation associated with the Iran War, all flooring surfaces had some headwinds in the first half. Carpet performed equally with other surfaces.”
While activity has stabilized in some carpet sub-segments, overall demand remains relatively soft compared to last year, largely due to ongoing pressure from elevated interest rates, a sluggish housing market and cautious consumer spending. That’s according to Christine Zampaglione, vice president of marketing for Stanton Design, who added: “New construction and existing home sales have not yet returned to historical norms, which has directly impacted flooring purchases tied to home moves and renovations.”
Despite limited housing turnover, elevated interest rates and affordability pressures, the carpet category is not far from turning around, some executives said. “Carpet is stabilizing because hard-surface share gains have slowed and technology has made carpet more appealing from both a performance standpoint and a design and color standpoint,” said Jamie Welborn, vice president of residential carpet at Shaw Floors. “Carpet isn’t competing to be in every room. It’s meeting actual customer needs like pet-friendly performance, sound absorption, warmth, trending colors and designs. One positive trend is the trade-up to higher-end carpets as consumers are willing to spend more and put their personal touch to complete their décor. We are seeing heavier weights, more patterns and a wider variety of colors.”
Challenges/opportunities
Sluggish. Slow burn. Housing freeze. Great Housing Reset. There are any number of descriptions for today’s housing market. Existing home sales, a key driver of residential replacement carpet, continue to hover at a subdued annual rate of around 4.06 to 4.09 million units—well below historical norms of over 5 million. “During that time [3-plus years], we have seen a continued erosion of demand for residential carpet,” Nuckols said. “Also, for years now, the consumer is being hit with one surprise after another. First came the high interest rates as inflation ran rampant in the post-COVID, free-money era, although this shouldn’t have been a surprise to anyone. Then, last year, just as inflation seemed to be getting in line, the tariffs impacted the cost of most imported goods. This impacted the cost of living, which in turn affected the consumer mindset. This year, the war in Iran resulted in higher oil prices, which impacted raw materials for fiber, backing and other costs. So, carpet prices were raised in Q2. And the war has certainly not helped the consumer mindset at all.”
Stanton’s Zampaglione said the most significant challenges facing the carpet category today continue to be tied to broader economic conditions. “Higher borrowing costs and limited housing turnover have reduced the number of large-scale renovation projects, while inflationary pressures have made consumers more selective with discretionary spending,” she explained. “The category also faces increased competition from hard-surface alternatives, particularly in main living areas where durability and waterproof features remain strong selling points. Additionally, fluctuating raw material costs, labor constraints and ongoing supply chain adjustments continue to create pressure throughout the industry.”
The Stanton executive pointed to another challenge: consumer perception. As she explained, “While carpet technology and design have evolved significantly with advances in stain resistance, sustainability and performance, there is still an opportunity for the industry to better communicate the comfort, wellness and design benefits that modern carpet provides.”
Then there is the issue of affordability. While not a factor for the affluent consumer, who continues to prop up the category with spending on high-end goods, there is a sizable portion of the consumer populace that is concerned about inflationary costs on everything from gas to groceries. “The uncertainty with the Iran conflict needs to be resolved which will lower gas prices reducing the inflationary pressure,” EF’s Lesslie said. “The decline in discretionary income has had an impact on purchases.”
Others agreed. “With slowed new construction, a soft housing market and affordability concerns, many consumers remain cautious with discretionary spending, particularly in entry-level and mid-tier segments,” Shaw’s Welborn said. “Consumers are researching more, comparing more and committing more slowly to larger purchases. Until housing turns or rates ease, those conditions will [remain].”
The way Drew Hash, Southwind president and CEO, sees it, the biggest challenge facing soft surface is the impact reduced customer traffic has on the market. “Fewer home sales mean fewer whole-house flooring or remodeling projects while hard surface, like LVT, continues to dominate consumer attention,” he said. “The opportunity for us is helping homeowners understand that today’s carpet is softer, more stylish, more pet-friendly and far more stain-resistant than they may remember.”
Outlook
Despite the series of gut punches, mill executives are far from glum about the future of soft surface. Many see a path to stability and growth in the coming quarters. “Several subsegments within carpet show promise for the immediate future,” said Joe Semaan, president of residential carpet, Mohawk. “The premium and decorative segments remain healthy as consumers seek products that offer style, comfort and personalization. Custom rugs and fabricated rug programs, meanwhile, also continue to gain traction, giving consumers more flexibility in how they incorporate soft surfaces into their homes. Most flooring retailers sell fabricated rugs today—rather than area rugs—with many dealers also offering serging and binding onsite.”
What’s more, ongoing product innovation around performance, sustainability, indoor air quality and design continue to create excitement. “While the market remains challenging, soft surface continues to have a clear and important role in the home where comfort, warmth, sound absorption and design matter most,” Semaan said.
Megan Black, senior product manager, soft surface, Tarkett Home, believes carpet’s inherent benefits of softness and styling could be a catalyst to stimulating the market. “Carpet has unique benefits that hard surface flooring simply can’t offer,” she said. “Its warmth, comfort underfoot, and styling with texture and depth are key attributes that continue to drive sales in the soft surface category. Rather than the whole house being carpeted, we see homeowners intentionally choosing carpet for rooms in their home where softness and comfort really count—like bedrooms, playrooms and living areas. At the same time, consumers are looking for flooring options that balance style, performance and value. Products that deliver premium comfort with affordability are especially resonating with today’s families.”
Meanwhile, Shaw’s Welborn said they are tired of sitting idly by and letting the market dictate terms. “We are not waiting for the market to improve our business,” he said. “We’re sharpening our product focus, tightening pricing discipline, strengthening operations and partnering closer with customers to help them win locally. Shaw has competitive advantages, including a broad product portfolio, great service and quality, U.S. carpet manufacturing, a diversified supply chain.”
