The U.S. economy in 2026 has been a tale of two cities. On the one hand, it’s the engine that has motored through inflation, tariffs and higher borrowing costs, resisting a recent spike in Treasury yields and a Fed rate increase along the way.
At the same time, the all-important housing market has stagnated, with mortgage rates for 30-year loans now above 7% and the lock-in effect keeping inventory tight.
Clearly, it has been the kind of year that tests the mettle of even the most experienced and savvy flooring retailer. There is still business to be had, retailers told FCNews, but it takes a much more robust effort to grab it.
“This year has been very unpredictable,” said Bruce Odette, president of Denver-based Carpet Exchange with 17 locations. “The first half was very robust, right up until the start of the Iran war. Even with that uncertainty, we continued to see slight increases and still had good momentum in the business. That changed around Labor Day. Once mortgage rates pushed past the 7% mark, we started seeing sales flatten out, with some weeks actually down.”
Because of that, Carpet Exchange’s focus has been to execute faster, putting great emphasis on getting quotes back to customers quickly and creating a sense of urgency around the purchase.
“I keep telling our team that our No. 1 competitor right now is ‘postponement,’” Odette said. “If we don’t execute the sale while the customer is engaged, too many things can get in the way. The hot water heater goes out. The car needs new tires heading into winter. Something unexpected comes up with the kids. Suddenly, the money going toward new flooring gets redirected somewhere else.”
The reality, according to Odette, is that we’re in a “want” business more than a “need” business. “People can usually live with their existing floor a little longer, and that means it’s up to us to create an experience that makes them want to move forward and gives them a reason to spend those discretionary dollars with us,” he said.
Flooring dealers are generally split on their expectations for the fourth quarter. Beyond the challenges of the housing market and dwindling consumer confidence are the highly contentious midterm elections set for November.
“My expectations for the fourth quarter are for it to be a soft quarter,” said Tom Heffner, owner of About All Floors, Douglassville, Pa. “I think we will hear a lot about the upcoming midterm elections all through October, and the news will most likely be negative. I expect that to soften demand for residential flooring.”
Heffner said there is business to seize out there, but you must look sharp to earn it. “We’ve focused on updating showrooms and recently completed a renovation of our main store both inside and out,” he said. “We want our customers to be very comfortable in our space.”
Some retailers have focused on operational efficiencies to improve their prospects. A case in point is Marshall Flooring in Mayfield Heights, Ohio, which devoted 2025 to implementing a new business strategy that required it to update its processes. But in so doing, it let go a large number of staff.
“We took an expected dip [in 2025] and now we are clicking as a unit and seeing the fruits of our decision,” said Matt Wien, partner. “We are up 27% over last year, and it feels good. It got a little hairy there for a minute as we were wondering if we made the right decision to implement such a massive change to a very established business.”
In the end, Wien said the move to proactively upgrade its business for the future was the right one. “We have doubled down on our technology and processes to allow our sales team to strictly focus on sales,” he said. “Providing our sales team the tools to increase the average ticket and reduce the sales cycle has been a recipe for success. We’re also partnering with vendors that value our relationship and are willing to work with us on private-label collections and exclusive lines so we can keep our margins where we want them.”
Salt Lake City-based RC Willey, with 13 locations across four Western states, has seen sales climb 2% year-over-year despite overall traffic being down 5%. The good news: “The customers that are coming in are serious buyers, and I’m seeing a trend to better goods,” said Eric Mondragon, division manager/flooring buyer.
It didn’t hurt that RC Willey offered incentives/sales promotions to seal deals. “We offered a free Ninja CREAMi ice cream maker with a $2,000 flooring purchase during the summer months, and it was a huge success,” Mondragon said. “It gave those customers that were on the fence about purchasing a reason to buy. Our Labor Day sales were really good, and that usually is a good indicator of how the fall/winter selling season is going to be. We just started our semi-annual flooring sale, so if that momentum continues, we should end the year up between 2%-3%.”
Fellow NFA dealer Baker Bros. Area Rugs & Flooring, with nine locations in the Phoenix market, is among those facing harsh economic headwinds. “Business continues to be a grind,” said Phil Koufidakis, president. “We are pretty much flat to last year but having to grind much harder to stay there. The place we see the most opportunity is with the aging-in-place boomer generation. With housing continuing to be at a stall and likely to be so for a while, the upper-end boomers should be the most motivated for home renovations. This group has also acquired the most wealth and disposable income. In the end we need lower gas prices. We will see what happens.”
Rising gas and diesel fuel prices, tariffs, spiking grocery prices and 7%-plus mortgage rates have impacted businesses throughout the country, including Ohio, where Flooring Partners operates three retail stores. “The walk-in business is off year over year in our stores, and I think consumer sentiment is driving this negative trend,” said Craig Phillips, executive advisor. “Our builders still report softer sales and don’t see an uptick in the next few quarters. We have committed resources and have hired additional outside sales help to go out and get business in our multi-family, builder and commercial businesses. On the retail side, we have committed to a nice digital campaign to get in front of retail flooring consumers in our markets. All this is starting to make a positive impact.”
