People aren't buying furniture like they used to.

Last week, a pair of furniture retailers said they are experiencing a massive sales slump compared to last year. On Thursday, luxury furniture brand RH reported a 19% drop in second-quarter revenue, while on Friday, Hooker Furnishings, a Virginia-based furniture manufacturer that sells goods at Wayfair, Macy's and other retailers, said their second-quarter revenue plummeted 36%.

Investors appear to be worried. On Friday, shares of RH (RH) fell 16%, while Hooker Furnishings (HOFT) dropped 17%.

The two companies are the latest in a growing list of furniture retailers seeing a slowdown after years of growth fueled by pandemic-era stay-at-home trends.

Last month, Williams-Sonoma, which owns West Elm and Pottery Barn, reported a 20% revenue decline for West Elm and a 10% decline for Pottery Barn. Wayfair, an online furniture seller, saw its second-quarter revenue decline 3.4%, and La-Z-Boy, a furniture manufacturer, reported a 20% drop in sales in August.

"We're in a period where consumers are buying fewer large-ticket furniture pieces than they did a year ago as they shift their spending," Williams-Sonoma CEO Laura Alber said on a call with investors.

Why aren't people buying furniture?

Brad Thomas, a retail analyst at KeyBanc Capital Markets, said the pain for furniture companies is part of a more significant shift in spending that has taken place since the pandemic.

"When the pandemic occurred, we all stayed home. Consumers stopped spending on travel and leisure experiences and spent on stuff," Thomas said. "The furniture category was one of many categories that saw a big benefit at the end of 2020 through 2021. In 2022 and the beginning of 2023 has been an unwind of that."

Sales at home improvement retailers like Home Depot and Target have also dropped in recent quarters.

The housing market has played a role in the recent home-improvement slowdown. US home prices have risen for five months as of June, and mortgage rates remain above 7%. This lack of affordability means less movement in the housing market and less money left over for furniture purchases.

"We continue to expect the luxury housing market and broader economy to remain challenging throughout fiscal 2023 and into next year as mortgage rates continue to trend at 20-year highs," RH's CEO Gary Friedman said on Thursday's earnings call.

Applications for a mortgage to buy a home dropped to a 27-year low last week, according to the Mortgage Bankers Association. Thomas said moving activity is an "important catalyst" for purchasing home goods.

"With elevated mortgage rates in low inventory levels, we're not seeing a lot of home purchase activity," he said.

Room for improvement?

Not all furniture retailers have survived the current downtrend in demand. Last month, national furniture chain Mitchell Gold + Bob Williams announced it would shutter operations.

"The current economic climate has presented significant challenges to the US furniture industry," the retailer's interim CEO, Chris Moye, wrote in a notice announcing the closures.

However, some retailers believe people may start buying more furniture soon.

"We are encouraged that incoming orders have trended higher each month through the summer compared to the prior year," Hooker Furnishings CEO Jeremy Hoff said Friday in a statement.

Thomas said some broader economic factors may impact the US consumer's "ability and willingness to spend." He pointed to an end of the yearslong pandemic pause of federal student loan repayments as a potential headwind for would-be homebuyers and for overall spending on furniture. Student loans began accruing interest at the start of September, and payments are due beginning in October.

"We see that as a risk for the US consumer," Thomas said.