Ikea boss sees a turnaround in housing construction

That is what Inter Ikea CEO Jon Abrahamsson Ring believes conditions in the housing market will improve in the coming year, indicating a positive outlook for the company’s kitchen business.

As more consumers invest in their homes, demand for home furnishings, especially kitchen products, is expected to increase.

Inter Ikea Group is the group of companies that connect Ikea franchisees in all 63 markets around the world.

THE AFFORDABILITY OF HOUSING IS AT THE LOWEST LEVEL SINCE 2007

In fiscal year 2026, Ring predicted that kitchens will become a big business for them, based on an analysis where we see that the interest rate will have falleninflation will have fallen, and then consumer confidence will rise again.”

The CEO also expects an increase in residential construction during that period, adding that the kitchen sector is “a really good one for us to prioritize.”

Amid the height of inflation, people weren’t moving “with the same frequency,” Ring said. “Since Ikea is a popular destination for newly moved, we recognized the downsides.” But the company does now see a revival in the movementhe said.

Ring noted that the company is already seeing the “home furnishings market starting to pick up.” He expects this trend to continue in the second half of the 2024 financial year.

IKEA PLANS MORE PRICE REDUCTIONS IN US AS EASE OF SHIPPING AND MATERIALS COSTS

This development is a reversal of what has been seen in recent years when many American buyers and sellers have been left on the sidelines 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 the gloomy economic story and the incoming economic data that have been stronger than that story,” which has “led to above-normal volatility in mortgage rates, despite an improving economy. .”

Redfin chief economist Daryl Fairweather also believes 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 demand is greatest,” Fairweather told FOX Business.

National Association of Realtors Chief Economist Lawrence Yun said signs are emerging that are generally associated with increased home sales.

He said there are more choices available to buyers, mortgage rates are lower than last year and jobs continue to be added to the economy.

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Although mortgage rates rose for the fourth week in a row, the average rate on a 30-year mortgage is 6.54%, Freddie Mac said Thursday. A year ago, the average interest rate on a 30-year loan was 7.79%.