Holiday Retail Outlook, a Half-Point Rate Cut, and Housing Trends

Originally published September 20, 2024. This version was rebuilt from the Federal Reserve's statement, NAR's existing-home sales report and Deloitte's holiday forecast for the FIN archive, and the facts are as of that date.

The Fed began cutting rates in September 2024, just as home sales hit another soft patch and forecasters predicted a slower holiday season.

The short version

• The Fed lowered the target range by 1/2 percentage point to 4-3/4 to 5 percent.
• NAR said existing-home sales retreated 2.5% to 3.86 million in August.
• Deloitte forecast holiday retail sales growth of 2.3% to 3.3%.

Interest rate cut offers hope

On September 18 the Federal Open Market Committee decided to lower the target range for the federal funds rate by 1/2 percentage point to 4-3/4 to 5 percent, and said it would carefully assess incoming data before further adjustments.

For furniture, lower rates could eventually ease mortgage costs and financing offers, but the effect would take months.

Housing affordability challenges

NAR said existing-home sales retreated 2.5% in August to an annual rate of 3.86 million and were 4.2% below a year earlier. The median price rose 3.1% to $416,700, and inventory was 1.35 million, or 4.2 months of supply.

High prices and still-elevated mortgage rates kept buyers on the sidelines, which held back the move-in purchases that drive furniture demand.

Holiday retail forecast. Slower growth expected

Deloitte forecast that holiday retail sales would increase 2.3% to 3.3% from November through January, totaling $1.58 trillion to $1.59 trillion, and that e-commerce would grow 7% to 9%.

Its economist said growth would be slower than the year before but supported by disposable income and a steady labor market, and that falling inflation was both a headwind and a tailwind.

Retailer updates

Rate relief had arrived, but housing and holiday forecasts both pointed to a gradual recovery. Furniture retailers planned for a modest season and a better 2025.

Related on FIN

• Move-In Furniture Tickets Are Drying Up
• Furniture Shoppers Are Holding Back

Sources

• Federal Reserve, FOMC statement (Sept. 18, 2024)
• National Association of Realtors, Existing-home sales dipped 2.5% in August (Sept. 19, 2024)
• Deloitte, Holiday retail sales expected to increase 2.3% to 3.3% (Sept. 2024)