Flooring News and Updates – September 2026

The North American flooring & interiors industry remains in somewhat of a cyclical trough, but recent data suggests a stabilization and growth going into 2027, rather than continued contraction. Recovery, however, has been uneven across markets

Residential repair and replacement remain the softest subsector – Stubbornly elevated mortgage and financing rates, low existing home sales, affordability and weak consumer confidence are suppressing large scale residential interior renovation projects. Mohawk (MHK) said in its Q2 earnings release that residential markets remain soft and that new construction continues to face pressure.

Commercial markets remain significantly healthier than residential – Mohawk noted in its Q2 report that commercial end-markets continue to outperform residential. Commercial flooring manufacturer Interface (TILE) posted Q2 sales 5.4% above the same period last year with significant margin improvement. Key markets driving this improvement include cycle-resistant sectors like healthcare and education, along with an uptick in commercial resilient flooring products.

Industry participants have seen improvement in pricing and mix and cost reductions, despite weaker than normal volume, but the pace of decline is slowing – Estimates indicate that dollar sales for the industry were down 5.5% in Q2 2026 with square feet down 6.5%. Compare this to Q1 2026, which saw declines of 7.1% ($ sales) and 10.0% (square feet), which suggests the pace of contraction is slowing, pointing to a recovery. Despite this, most manufacturers and distributors posted better margins relative to last year, implying operators are benefiting from mix shifts to higher margin products, and have been successfully deploying cost-cutting initiatives to boost the bottom line despite a difficult sales environment.

M&A continues despite challenging demand environment – Facing a difficult demand and financing landscape, buyers continue to seek acquisitions that fit their strategic vision. Deals completed this year include Mohawk’s acquisition of Hero Flooring, a rubber/resilient manufacturer; BuildDirect’s acquisitions of Greyne Custom Wood and Tile Outlets of America; Lowes’ acquisition of Artisan Design Group; and Atlanta Flooring Design Centers’ purchase of ProFloors. Buyers have been primarily focused on geographic density (especially in markets like the Southeast), vertical integration (e.g., Lowes/ADG), commercial end-market specialization, resilient and LVT categories and deep value opportunities.

The key question: when does residential demand recover – This is the most pressing unanswered question in the industry today, and we are likely in the first of three stages:

• Stage 1 – inventory normalization and essential repair – Manufacturers and distributors have reduced inventory, working through high-cost product that has been a drain on margins. Retailers like Home Depot and Lowes have seen a reduction in larger projects with a tilt toward necessary maintenance, with sequential improvements in the pro-focused sector
• Stage 2 – consumer re-engagement with smaller discretionary projects. Coming out of this trough we expect the leading subsectors to be smaller projects, which should benefit flooring – e.g., single room vs. whole house replacement, rental turnover, bathroom tile projects, aging home repairs
• Stage 3 – eventual full cycle recovery and large-scale remodels. This will require some combination of lower interest rates, movement on inflation and affordability, increased consumer confidence and higher existing home sales.

Our outlook by segment – We see a mixed bag in the near term, with some sub-sectors already performing well and others still to come. Overall, we would characterize the market as showing a late trough/early stabilization with recovery to materialize over the next year.

About Anchor Peabody

Anchor Peabody is the premier investment bank for the building industry. Our dedicated M&A specialists deliver outsized outcomes that only insiders can. For a confidential discussion, please reach out to Aaron Toomey at [email protected]