How Big is the Carpet Industry? An Analysis of the U.S. Residential Carpet Market
May 2, 2020
According to our research, the U.S. carpet industry continues to remain flat or experience a slight increase in the market. This is mainly due to changes in the consumer’s interest and behavior. For 2019, the estimated US market size for the carpet and rugs market is about $14.1 billion. The U.S. industry accounts for about 45% of the world’s carpet production. Although there were no public data available revealing the market size of the residential carpet and also, there were no sufficient data points available to triangulate the desired information, we were able to find that the US accounts for the largest market share in North America in the residential carpet market (2016). The data related to the market size of the US residential carpet market is available behind paywalls. Moreover, in the absence of the market size data, we estimated a rough figure for TAM (total available market) for the high-end or luxury residential carpets in the US to be more than 13 million units of newly constructed apartments and housing starts per year.
Some of the key players in the residential carpet market in the US include Mohawk Industries, Inc., Shaw Industries Group, Dixie Group, Inc. Scott Group Studio,The Rug Company and Fabrica (a brand of Dixie Group, Inc) are the key players in the luxury or high-end residential carpet market.
The US Carpet Market - Industry Size
The US market size (by revenue) for carpet and rugs is projected to reach $11.8 billion in 2018, showing an increase of 2.4% against 2017. Between 2013 and 2018, the market value for the US carpet market is growing at an average annual rate of +1.2%.” Additionally, in terms of value, the US carpet and rug production reached $9 billion in 2018.
Calculation: For 2018, the US market size (by revenue) for carpet and rugs is = $11.8 billion
Another report from the Freedonia Group report, for 2019, the US market size for the carpet and rugs market is $16.2 billion, growing by 4.5% annually to 14.6 billion square feet in 2019.”
So, we decided to take an average of the above two data for the US market size for the carpet and rugs market for 2019 ($12 billion + $16.2 billion/2) = $14.1 billion
Therefore, for 2019, the estimated US market size for the carpet and rugs market is about $14.1 billion.
Additionally, for 2019, the revenue for the US carpet mill industry is estimated to be $11 billion with 0.1% annual growth from 2014 to 2019. The total number of businesses in the industry is 288 providing 31,017 employment.
The IBIS World 2019 report mentioned that the growth in the carpet mill industry is attributed to the growth in the residential market which governs by an increase in the number of housing starts and per capita disposable income.” This will ultimately boost spending on home furnishings including carpets and rugs leading to the growth of the overall industry.
Shaw Industries Group, Mohawk Industries, and Engineered Floors are the companies with the largest market share in the US Carpet Mills industry.
Carpet and rugs market has been divided into following segments:
Based on type, the residential carpet market has been segmented into Tufted, Woven, Needle-punched, Knotted, and Others (Needle-felt, knitted, hooked, and braided).
For rug making, weaving is the mostly used technique. It is used to make knotted, flat-weave and braided area rugs.
Based on material, the market has been segmented into Nylon, Polyester, Polypropylene, and Others (Wool, triexta, acrylic, and silk).
Nylon is among the “most popular carpet fiber by far (90%) for homes and heavily favored (65%) for all uses – both residential and commercial.”
For high traffic areas, Acrylic and Polypropylene carpets are known to be the most durable types.
Global Market Size:
The global market size for carpets & rugs was $91.60 billion in 2017, growing at a CAGR of 4.2% from 2017 to 2022. By 2022, the market is expected to reach $112.69 billion.
North America accounted for the “largest share among all the regions” in terms of value with the U.S. being the country with the largest market share in the North American region, followed by Canada.
The rapid expansion of housing and construction activities in the residential sector across the US is the main factor behind the dominance of the North America carpets and rugs industry.
Carpets and Rugs Market, By Region, 2022 (US$ Million)
However, industry experts have different opinions on this for 2019 and 2020 residential carpet market in the US. “With little to change the current market dynamics,” the residential carpet market in the US is “expected to stay flat to slightly down for the remainder of 2019 and into 2020.” According to T.M. Nuckols, president of the residential division of The Dixie Group, “hard surface growth will continue to impact soft surface sales and carpet floor share within retail stores.” He further added that “2020 is an election year. That coupled with our volatile political environment will make it very difficult to predict how the flooring market will play out.”
Therefore, the US residential carpet industry is experiencing a little or almost no growth which is expected to continue doing so in 2019 and 2020. This is mainly due to the shift in consumer’s interest in other alternative flooring options including hard surfaces. However, a slight increase in the US residential carpet industry is driven by the increase in housing starts in the US. The increase in housing starts leads to an increase in the number of new houses producing new demand for residential carpet.
Some Other Helpful Information
The recently published Floor Covering News, 2019 revealed that today only less than 40% of homes have carpet, “with most of that in the bedrooms—an area where soft surface still maintains a stronghold.” However, earlier to this, “carpet represented about 64% of the flooring surface in homes.”
Out of the total flooring market, the US carpet industry accounts for 51% of the market. A recently published article revealed that a significant portion of the US carpet industry is located in Georgia, “where 14 out of the top 50 manufacturers of all U.S. floor coverings are located in the state and producing carpet.” Also, currently, about 50% of the top 20 carpet manufacturers located in the United States.
Key players in the US carpet and rugs market include Mohawk Industries, Inc., Shaw Industries Group, Lowe’s Companies, Inc., Home Depot, Inc., Interface, Inc., Dixie Group, Inc., and others.
1. Mohawk Industries: Mohawk Industries is the world’s largest flooring provider. It is headquartered in Calhoun, Georgia. The company has acquired 45 establishments since 1992. Its end markets include residential new construction, residential replacement, and commercial.
The company has vertically integrated operations that deliver “business advantages such as quality control, cost management, and raw material integrity.” They have global ceramic and flooring segments (North America and the rest of the world). It is “one of the largest suppliers of premium carpet, rugs, laminate, sheet vinyl, luxury vinyl tile and wood flooring in North America.”
Various brands under Mohawk Industries are Mohawk, Karastan, Godfrey Hirst®, Mohawk Group, Durkan, Mohawk Home, Quick-Step, Pergo and IVC Resilient Design.
Pricing - The company did not disclose its pricing details on its website; however, provides wide selection options based on the carpet type, color, fiber brands, lifestyle, technology, and others.
Pricing - Although the company has not provided any clear pricing detail on its website, there are price bars (|, ||, |||, ||||) given to make a selection while buying a carpet through their online collection.
4. Dixie Group Inc.: The Dixie Group is “one of America's fastest-growing floorcovering companies” focussing towards the soft floor covering market. The company promotes its products to domestic and international customers through a variety of channels. Their products are marketed and used in the “construction, replacement, and retail markets including homes, restaurants, hospitals, hotels, commercial buildings, luxury motor coaches and yachts.”
Dixie Group’s brand portfolio companies include Masland, Fabrica, Atlas, Home, and others. The company had a restructuring plan and diversified its operations into the carpet industry. They made their “first major carpet acquisition, Carriage Carpets, in 1993.” The company started operating solely as a floor covering company from 1999 after selling its “remaining traditional textile operations.” Then in 2003, Dixie sold its “broadloom carpet, needlebond, and carpet recycling operations that served the factory-built housing, indoor/outdoor and carpet pad markets.” Currently, the company has its business concentrated in the “higher-end segments of the soft floor covering markets.”
Pricing - The company did not disclose its pricing details on its website.
Shaw Industries Group combines several portfolio brands including Patcraft, US Floors, Shaw Floors, Shawgrass, and others. The company is known to. supply product to residential and commercial markets which include “carpet, resilient, hardwood, laminate, tile and stone, synthetic turf and other specialty products.
The product portfolio of one of its portfolio brands Shaw Floors includes carpet, hardwood, laminate, vinyl, tile & stone, and floorigami DIY carpet. It offers different types of carpet that include Bellera, Caress, Colorwall, Foundations, Simply the Best, and TruAccents.
As per its LinkedIn profile, Dixie Group has about 501-1000 employees.
The company offers soft flooring products including residential and commercial carpets and rugs. One of its brand Fabrica’s product portfolio includes Nylon Carpets, Wool Carpets, Hardwood, and Rugs (Area Rugs and Custom Traditional Rugs).
Some of the companies operating in the luxury or high-end residential carpet space in the US include Scott Group Studio, The Rug Company, Fabrica, and others.
1. Scott Group Studio: Scott Group Studio is an umbrella company combining three luxury carpet brands in the US including PWV, Hokanson, and Scott Group Custom Carpets. Scott Group Custom Carpets initially started in 1969 in the US and then acquired Hokanson, a luxury residential brand in 2014. Hokanson has been operating in the high-end carpet segment since 1987. PWV Studios is located in Grand Rapids, Michigan. It is “a boutique designer and builder of hand-tufted wool carpets and rugs.”
Pricing - The company did not disclose its pricing details on its website.
3. The Rug Company: The company was founded in 1997 and since then it is “endeavored to create the most desirable rugs in the world.” According to the company website, their “rugs are beautiful, distinctive and original.” Their rugs are crafted by hands using ancient techniques. The rug company is known to use naturally luxurious raw materials that are then “handled with such reverence that they lose none of their extraordinary properties during the production process.”
Pricing - The company did not disclose its pricing on the website and instead used codes; for example “Price Band 9”, “Price Band 13”, and likewise. This could be due to the reason that they provide customized carpets and therefore, the price could decide after the making of the rug.
The company offers handmade rugs which are made customized based on size and fitting. They provide services including size and fitting guide, consultation and approval, and care and cleaning services. Additionally, The Rug Company offers customised personal service, custom, and bespoke services to its customers.
The product portfolio of the company includes contemporary rugs, farrow & ball, the archive collection, and accessories such as cushions and wallhangings.
Market Growth and Distribution Channels
Research has indicated that the U.S. floor coverings market is “approaching pre-recession levels.” The growth in the residential carpet market has been “led by gains in the builder markets.” Due to a steep increase in personal income and growing home values, the residential carpet market is strengthening. However, the buyer’s interest is changing continuing the demand “to shift to hard surface flooring”. This is due to the increased preference of buyers for “ceramic tile and wood and resilient flooring.”
The distribution channels include flooring manufacturers, distributors, retailers, and end customers. Shaw Industries Group discussed above is one of the “world's largest carpet manufacturers” whereas, Mohawk Industries provides end-to-end integration including material sourcing, manufacturing, and distribution.
End customers of the carpet market include residential new construction and residential replacement.
These companies’ target audience involves both the end consumers and the Architects & Designers (A&D) community. Generally, residential carpet companies which are into luxury or high-end segment target the Architects & Designers (A&D) community.
In 2018, the carpet and rug consumption in the US reached the highest point and is “likely to continue its growth in the near future.”
An increase in the residential carpet market is due to an increase in housing starts and the strong interest of people in home renovation projects in the US. This includes the removal of old or “out-of-style carpets and rugs” which ultimately cause an increase in demand.
Another major driver affecting the demand for tufted carpets and rugs is the advancements in building construction activity. The US market for tufted products including carpet tiles is projected to experience strong growth due to their “ease of installation and ability to be removed in case of staining or premature wear and tear.”
It has been projected that broadloom carpeting will continue to grab the majority of demand for tufted carpets due to its low cost and “consumer desire for a wall to wall carpeting.”
According to the Freedonia Group report, it has been estimated that “new housing will see the fastest gains in carpets and rugs demand through 2019.” This is due to the reason that often a newly built house needs to install carpet and rugs for their “moderate cost, ease of installation, and favorable aesthetics.” Additionally, “residential remodeling and replacement” also act as a growth driver for the demand of carpet and rug continuing “to account for the largest share” of the market. This is due to the reason that homeowners usually replace their “older or worn carpets and rugs with newer products that offer enhanced visuals or improved stain resistance.”
Moreover, in 2019, the demand for carpets and rugs in the commercial market is estimated to be “supported by rising spending on office and commercial and institutional construction, the market segments where carpets and rugs are used most extensively.” However, the market for carpets and rugs will experience tough competition from the market of hard surface flooring as it is known to be more durable and provides a more attractive appearance for consumers.
The IBIS World report illustrated that “housing starts affect demand for carpets from the residential housing sector because flooring materials are input for housing construction.” Therefore, as the number of new dwellings increases, the demand for carpet materials also increases simultaneously. However, in 2019, “housing starts are expected to decrease posing a potential threat to the industry.”
The report further illustrated that “private spending on home improvements, upgrades and repairs affect demand for carpets, rugs and other Carpet Mills industry-relevant home furnishings.” Over the past five years, “private spending on home improvements has increased, driven by increased per capita disposable income and increased home sales.” In 2019, private spending on home improvements is projected to increase, “representing a potential opportunity for the industry.”
As recently published by Forbes, about 1.1 million new homeowners have joined the housing economy in the first quarter of 2019, whereas, the increase in the number of renters was only 458,000, “following a decrease of 167,000 in the last quarter of 2018.”
As per the Statista report, 2018, the total number of households in the US was 108.21 million in 2001, then it reached 117.54 million in 2010, 124.59 million in 2015, and in 2018, the total number has reached 127.59 million. Below is a graph depicting the year-wise data for the number of households from 2001 to 2018 which indicates that there was a slow but steady increase in the number of household units.
Reports, experts, and even news articles hinted to a likely recession. As per the Wall Street Journal’s Economic Forecasting Survey, 49% of the respondents “expect a recession to occur in 2020, while 36.6% expect one the following year.”
To meet projected demand, there is a need to build on average 325,000 new apartment homes each year. Between 2012 and 2016, the apartment industry on average built “only 244,000 new apartment homes per year; however, the last time the industry built more than 325,000 in a single year was 1989.”
Among US cities, most apartment units needed between 2017 and 2030 are in cities including New York, Dallas-Ft. Worth, Houston, Miami-Ft. Lauderdale, Atlanta, Los Angeles, Phoenix, Orlando, Washington DC, and Austin.
The expected number of apartment completions in 2017 was at the top (345,000 units) showing an increase of 21% compared to last year’s (2016) deliveries when more than 285,000 units have been completed.
Luxury or high-end residential apartments in the US: The percentage of luxury or high-end apartments in the US has increased from 52% in 2012 to 87% in 2018. Also, in 2017, the percentage of luxury rental apartments was 79% of all apartment construction. Below is a graph depicting the year-wise percentage of high-end apartments built in the US.
Percentage of Properties with High-End Apartments by Year Built in the US
Based on regions, the construction of high-end apartments in the US is at its high in Southwest (88%), followed by Mid-Atlantic (87%), Midwest (82%), Western (82%), Northeast (81%), South (80%), and the Southeast US (78%). This data is from 2017.
High-end apartments construction by Metro was the highest in Dallas-Ft Worth, Texas; Houston, TX; Kansas City, MO; Charlotte, NC; Detroit, MI; and Cleveland - Akron, OH with all apartments (100%) built-in 2018 as high-end apartments.
Top 30 Largest U.S. Metros - Share of High-End Apartment Buildings Completed in 2018
Housing Starts in the US: According to the Fred Economic Data available for recent years till September 2019, the total housing starts or the total number of new privately-owned housing units started were given from January 2019 till September 2019 for each month. Based on this data, by the end of September 2019, the number of new privately-owned housing units started totaled 11,252,000 units (Jan + Feb + Mar + Apr + May + Jun + Jul + Sep). We obtained this data by adding each month’s inventory for housing starts. Next, we assumed that for the next three months, if the number of new privately-owned housing units started were an average of the number of units completed in nine-month i.e. 1250,000 units (11,252,000 units/9) for the rest of the three months (October, November, and December 2019). Therefore, the total number of new privately-owned housing units started for 2019 (for the entire year or 12 months) would be roughly about 15,002,000 [11,252,000 units + (3 x 1250,000 units)].
In 2018, the total number of new privately-owned housing units started was (totaling each month’s number of units separately) 14,995,000.
TAM or Total Available Market for Residential Carpets in the US: For the residential carpet market, its customers include newly built residential apartments or housing starts and the replacement apartments which means that they want to replace their carpet with a new one. Based on the available data, we can estimate the total available market (TAM) in terms of the newly built apartments or housing starts in the US which might need to purchase carpets for their houses (though the number of replacements is not known).
Therefore, for residential carpets, the total available market in the US would be more than 15,002,000 or 15 million housing starts.
In terms of new apartments that also meant TAM (Total available market) per year for residential carpets in the US. The number of new apartment construction was 285,000 units in 2016, 345,000 units in 2017, and 283,000 units (est.) in 2018. To obtain a rough estimate for 2019, we assumed that the number of apartment construction will rise at an average rate.
Calculation: Taking an average of the three year’s units to obtain the number of new apartment construction for 2019 = 285,000 units + 345,000 units + 283,000 units (est.)/3 = 304,333 units (est.)
Therefore, in addition to the above, the total available market for residential carpets would be roughly 304,333 units (est.) in terms of newly constructed apartments.
Luxury or High-End Residential Carpet Market in the US: As the percentage of luxury or high-end apartments in the US was 79% of all apartment construction in 2017 and 87% in 2018. To obtain an estimated figure, we took an average of the previous two year’s data.
Calculation: In 2017, the percentage of luxury or high-end apartments in the US was = 79% of all apartment construction
In 2018, the percentage of luxury or high-end apartments in the US was = 87% of all apartment construction
For 2019, the estimated percentage of luxury or high-end apartments in the US would be = (79% + 87%/2) = 83% of new constructed apartments = 83% of 304,333 units (est.) = 252,596 units (est.)
Therefore, for 2019, the total number of high-end apartments would be roughly about 252,596 units and this can be considered as the total available market for high-end or luxury residential carpets in the US.
If the same percentage is applied to the housing starts, the estimated TAM for high-end residential carpets (in terms of housing starts) would be = 83% of 15 million = 12.45 million units
Upon adding the above two TAMs (12.45 million + 252,596 units), the estimated rough figure for TAM (total available market) for the high-end or luxury residential carpets in the US would be more than 12,702,596 units or roughly more than 13 million units of newly constructed apartments and housing starts per year.
The US Residential Market - Demographic Analysis:
Age: As per the 2017 AHS (American Housing Survey) data, among the first-time homebuyers, the majority belongs to the younger generation. About 53% of first-time homebuyers are under the age of 35 years, 46% were between the age of 25 - 34 years and 7% were under the age of 25 years. Apart from this, among first-time home buyers, 38% were between the ages of 35-54 years and 9% were of the age 55 and above.
The median age of the first-time homebuyers in the U.S. increased to 34 years, compared to 32 years in 1997.
Marital Status: Most (a larger share of) of the new homeowners “buy before marriage and form new households at the time of purchase.” Therefore, the majority of first-time homebuyers in the US are unmarried. The percentage of first time home buyers decreased from 61% in 1997 to 51% in 2017. Among first time buyers, 35% were never married and 15% were divorced/separated/widowed.
Among all Millennial homebuyers in 2019, 15% were under 29 years old who bought a home as an “unmarried couple.”
In conclusion, our research indicated that there is a direct correlation between both the residential carpet market and the residential housing market and that the increase in the residential buildings can be a driver behind the growth in the carpet market. According to the Fred Economic Data, the total number of new privately-owned housing units started for 2019 is estimated to be roughly about 15 million with the estimated percentage of luxury or high-end apartments in the US 83% in 2019. Also, it was found that the percentage of luxury or high-end apartments in the US was 79% of all apartment construction in 2017 and 87% in 2018 indicating an increase in the number of high-end apartments.
Additionally, while analyzing the year-wise data for the number of new apartment construction, we found that there was a steady increase in the number of new units between 2012 to 2017; however, in 2018, this number decreased by about 11% from the previous year (2017). This indicated that apartment construction was at its peak in 2017 and ultimately slowed down in 2018.
Overall, although the number of housing starts and new apartment construction is rising (though at a slow pace), the consumer’s interest has shifted towards other alternative options of flooring. However, there is still scope for a high-end or luxury segment as this percentage is increasing rapidly among new apartment construction from 52% in 2012 to 87% in 2018. Therefore, along with the rise of high-end or luxury apartments or housing starts, the market size for residential carpet will rise. Another part of this market is the replacement market where consumers want to replace their old carpets is also on the rise.