Furniture Sales Weaken Further as Housing Market Remains Soft
As the Canadian real estate market struggles to regain momentum, a closely tied industry is feeling the strain: furniture retailers.
In November, furniture stores in Canada sold about $1.1-billion in merchandise, based on inflation-adjusted figures from Statistics Canada. Sales have been treading water for years and remain more than $200-million below peak months in 2020 and 2021, when home sales hit record levels and consumers upgraded their spaces during the pandemic.
Real estate activity has softened since that frenzied period, especially in Southern Ontario and British Columbia. Economists don’t expect a large rebound taking hold this year, which is bad news for retailers that ride the boom-and-bust cycles of the housing market. A similar dynamic is playing out in the United States, where home sales are lacklustre because of higher interest rates.
For retailers, the adjustment has been jarring. Some publicly traded furniture companies have shed billions of dollars in market value in recent years.
Wayfair Inc. W-N , the American e-commerce retailer that also sells in Canada, has seen its shares rebound of late, but remains about 68 per cent below a 2021 peak.
“The housing market’s been anemic since 2022,” chief executive Niraj Shah said on a December conference call.
The home furnishings market, he added, is “unusually fragmented. And that’s just a historical legacy. What we’re seeing is that a lot of the retailers that kind of are smaller and up through the middle, they’re increasingly distressed or going out of business, recoiling.”
Luxury furniture brand Restoration Hardware – another U.S. retailer with a Canadian footprint – has also seen its share price plummet since 2021. “We’re also in the third year of the worst housing market I’ve seen in my 38 years in this industry,” CEO Gary Friedman said on a September earnings call.
But some companies have managed to adjust to a slow-moving housing market. Shares of Leon’s Furniture Ltd. LNF-T unchno change, one of Canada’s largest home furnishings retailers, are not far off all-time highs set in 2025. Replacement-driven demand, a broad product mix and higher conversion rates have supported steady profitability.
“Housing activity is a positive contributor to furniture demand, but it is not the only factor influencing performance,” CEO Mike Walsh wrote in an e-mail.
“Our biggest gains continue to come from the replacement business … We’ve seen continued growth, as many customers choose to refresh their existing spaces after deciding not to list their home.”
Resale activity has been uneven across regions. National home sales fell 2.7 per cent in December from November, closing out a year shaped by hesitant buyers, according to the Canadian Real Estate Association. Despite pockets of weakness in B.C. and Ontario, sales have improved in other regions – including the Prairies and Atlantic Canada – offsetting some of the retail damage.
After a weak start to 2026 and near-zero population growth, economists at the Bank of Montreal predict the housing market will stabilize gradually this year, with sales volumes firming modestly even as prices remain subdued. Mortgage rates are expected to hold at roughly 3.6 per cent to 3.8 per cent, while investor activity remains limited.
“The market is normalizing after a period of outsized strength, where ultra-low interest rates, a demographic boom and speculative psychology combined to push valuations out of line with income fundamentals. The adjustment has left sales volumes low and prices correcting and now stagnating in some markets,” BMO senior economist Robert Kavcic said by e-mail.
Mr. Kavcic adds that elevated prices and mortgage rates are sidelining buyers, while weak investor economics are reducing appetite. Softer conditions in B.C. and Southern Ontario are also encouraging buyers to hold off in anticipation of better prices.
The trade war is also affecting smaller retailers and furniture manufacturers. In October, U.S. President Donald Trump imposed 25-per-cent tariffs on imports of kitchen cabinets, vanities and upholstered furniture. Further increases were delayed, though the current levies are damaging to Canadian companies that sell into the U.S. Export-focused furniture makers say they’re keen on selling within Canada, but a sluggish real estate market makes the timing far from ideal.
The Bank of Canada isn’t helping much either. The central bank held its key interest rate at 2.25 per cent in December, and it’s widely expected to remain on pause for the foreseeable future. The days of rock-bottom borrowing costs in the pandemic – a key ingredient in fuelling the housing boom – are unlikely to return.
“Generally, lower housing turnover means less spending on related consumer goods – furniture, accessories, building materials and equipment. It also means less renovation activity, either by investors or new homeowners,” said Mr. Kavcic.
“Arguably if we saw [mortgage] rates move down closer to 3 per cent, affordability would improve to the point where demand comes back into the market, but we’re not there yet. And we don’t see the Bank of Canada cutting rates further in 2026.”
While smaller furniture retailers remain vulnerable, the bigger players are seeing some light at the end of the tunnel. Mr. Shah of Wayfair told investors in December that sales declines have “bottomed out.” Even with share prices way below record highs, they’ve risen nearly 250 per cent since the end of March, 2025.
“People are always buying new things to freshen up their house and they’ll have needs,” he said. “Maybe their child’s now at an age where they need a desk or whatnot. So things continue to evolve and change.”
This article was first reported by The Globe and Mail
