Inter Ikea CEO Jon Abrahamsson Ring believes housing market conditions will improve over the coming year, signaling a positive outlook for the company's kitchen business.
As more consumers invest in their homes, demand for home furnishings, particularly kitchen products, is expected to rise.
Inter Ikea Group is the group of companies that connects Ikea franchisees in all 63 markets around the world.
HOUSING AFFORDABILITY IS AT THE LOWEST LEVEL SINCE 2007
In fiscal year 2026, Ring projected that kitchens will be a big business for them based "on an analysis where we see that interest rates will have come down, inflation will have come down, and then consumer confidence will come back up."
The chief executive also expects an increase in residential construction during that time, adding that the kitchen business is "very good for us to prioritize."
Amid the height of inflation, people weren't "moving at the same frequency," Ring said. "Since Ikea is a popular destination for the newly moved, we have recognized the downs." But the company is now seeing an uptick in movement, he said.
Ring noted that the company is already seeing that the "home furnishing market has started to pick up." He anticipates that trend will continue in the latter half of fiscal year 2024.
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This development is an about-face to what has been seen in recent years when many U.S. buyers and sellers were sidelined as housing became increasingly unaffordable due to high mortgage rates and rising home prices.
Freddie Mac chief economist Sam Khater explained that in recent years "there has been a tension between downbeat economic narrative and incoming economic data stronger than that narrative," which "has led to higher-than-normal volatility in mortgage rates, despite a strengthening economy."
Redfin chief economist Daryl Fairweather also believes that the housing market conditions will improve but "it's unclear by how much."
"It really depends on how much rates fall and how much easier it becomes for developers to build more housing where it is most demanded," Fairweather told FOX Business.
National Association of Realtors chief economist Lawrence Yun said that signs usually linked to more home sales are starting to appear.
He said that there are more choices available for buyers, mortgage rates are lower than last year, and jobs are still being added to the economy.
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Though mortgage rates climbed for the fourth straight week, the average rate on a 30-year fixed mortgage sits at 6.54%, Freddie Mac said on Thursday. A year ago, the average rate on a 30-year loan was 7.79%.
