As the Canadian housing market continues to falter, furniture retailers across the nation are feeling the pressure. November figures from Statistics Canada reveal that furniture sales hovered around £1.1 billion, a stark contrast to the peak levels seen during the pandemic in 2020 and 2021. The ongoing sluggishness in home sales, particularly in Southern Ontario and British Columbia, poses significant challenges for retailers reliant on the cyclical nature of real estate activity.
Declining Sales and Stagnant Growth
The data indicates that furniture sales remain over £200 million below the heights reached during the housing boom. This decline reflects a broader trend, where the once-booming market has now settled into a period of stagnation. Economists predict that a robust recovery is unlikely this year, which spells trouble for retailers who have historically thrived during housing booms. A similar pattern can be observed in the United States, where increased interest rates have led to lacklustre home sales.
For many furniture companies, the adjustment has been harsh. Several publicly listed retailers have incurred substantial losses in market value, with Wayfair Inc., the American e-commerce giant that operates in Canada, witnessing a staggering 68 per cent drop from its 2021 highs despite a recent uptick in shares. “The housing market’s been anemic since 2022,” stated Wayfair’s CEO, Niraj Shah, during a December conference call. He noted the historical fragmentation of the home furnishings sector, suggesting that many mid-sized retailers are facing significant distress or even closure.
Resilience of Major Players
However, not all companies are struggling to adapt. Leon’s Furniture Ltd., one of Canada’s largest furniture retailers, is closing in on all-time highs set in 2025. CEO Mike Walsh attributes this resilience to a combination of replacement-driven demand and a diverse product offering. “Housing activity is a positive contributor to furniture demand, but it is not the only factor influencing performance,” he explained in an email. Walsh highlighted that many customers are choosing to refresh their existing living spaces rather than engaging in the housing market.
Despite uneven resale activity across the country, with national home sales dropping 2.7 per cent in December, some regions like the Prairies and Atlantic Canada are showing signs of improvement, which could mitigate retail losses.
The Economic Outlook
Looking ahead, economists at the Bank of Montreal anticipate a gradual stabilisation of the housing market in 2026, although sales prices are expected to remain subdued. Mortgage rates are predicted to hold steady between 3.6 per cent and 3.8 per cent, while investor activity is likely to remain limited. This environment of low housing turnover generally translates to decreased expenditure on associated consumer goods, such as furniture and renovation materials.
BMO senior economist Robert Kavcic noted that while there is potential for improved affordability if mortgage rates decrease, such a scenario appears unlikely in the near future. The ongoing trade tensions, particularly the tariffs imposed on furniture imports by the U.S., are compounding the challenges faced by smaller retailers and manufacturers.
Bright Spots for the Future
As the market adjusts, larger retailers are finding glimmers of hope. Wayfair’s CEO mentioned in December that the decline in sales appears to have reached its lowest point, with a significant rebound in share prices since March 2025. This suggests that while challenges remain, there is potential for recovery as consumer needs evolve.
“People are always buying new things to freshen up their house,” Shah noted, emphasising the ongoing demand for furniture, driven by changing lifestyles and needs.
Why it Matters
The current landscape for furniture retailers underscores the intricate relationship between the housing market and consumer spending. As home sales continue to wane, the ripple effects on related industries, including furniture, are becoming increasingly evident. Understanding these dynamics is crucial not only for retailers but also for policymakers aiming to stimulate economic growth in a challenging environment. The fate of Canadian furniture retailers serves as a barometer for broader economic health, reflecting consumer sentiment and spending habits in uncertain times.
