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Online home decor retailer Wayfair continues to see mixed customer behavior amid heightened competition, with concerns about the housing market and tariffs also looming. In Wayfair’s third-quarter earnings report for 2025, it revealed that while its total net revenue reached $3.1 billion during the quarter, up 8.1% year-over-year, the company suffered a net loss of $99 million, which is higher than the $42 million net loss it faced in 2024. Wayfair also had 21.2 million active customers on its platform during the quarter; however, this represents a 2.3% decrease compared to the same quarter in the previous year. Despite having fewer active customers, the company saw a glimmer of hope during the quarter. Repeat customers placed 80.1% of total orders delivered, which is slightly higher than the 79.9% it reported during the same time period the year before. Also, the average order value was $317 during the quarter, $7 higher than the average order value during the same quarter in 2024. Wayfair CEO says home decor category is recovering slowly Wayfair CEO Niraj Shah said that despite a sluggish housing market, the home decor category has “moved past its multiyear trend of double-digit declines” and has been “inching closer and closer to flat over the course of 2025,” during an earnings call on Oct. 29, “Existing home sales continue to bounce along the same multi-decade lows we’ve seen since late 2022,” said Shah. “Decreasing short-term interest rates certainly loosened financial conditions, but mortgages are a longer-duration product, and will require more relief in long-term rates before we start to see a broader unlock in mobility. In that context, it’s important to note that our plan to grow is driven by Wayfair-specific factors and is not reliant upon a recovery in the housing market.” The average 30-year mortgage rate in the U.S. has decreased slightly in recent months; however, it still hovers above 6%, a figure that has led many consumers to delay new home purchases as they struggle with affordability. The U.S. housing market appears to be slowly bouncing back, as indicated by its performance in September. How the U.S. housing market performed in September 2025: Existing-home sales spiked by 1.5% month-over-month in September. Month-over-month U.S. home sales rose in the Northeast, South and West, and fell in the Midwest. Unsold housing inventory increased 1.3% month-over-month. The median existing-home sales price rose by 2.1% year-over-year, reaching $415,200. Source: National Association of Realtors “Inventory is matching a five-year high, though it remains below pre-COVID levels,” said NAR Chief Economist Lawrence Yun in a press release. “Many homeowners are financially comfortable, resulting in very few distressed properties and forced sales. Home prices continue to rise in most parts of the country, further contributing to overall household wealth.” The housing market isn’t the only threat to the home decor category. Tariffs, which President Donald Trump announced earlier this year, have caused consumers nationwide to become more cautious about their spending as they anticipate price increases for goods and services. Shah said that tariffs have not negatively affected the shopping behavior of Wayfair customers. The company only noticed a “short-lived” increase in sales of appliances in the early spring and vanities late in the third quarter. “We really have not seen any consumer behavior based on the tariffs,” said Shah. “So as we mentioned earlier on the call, the minor pull forwards we saw lasted days in duration and were very small. So we don’t really think there’s any tariff-induced behavior. We actually think the holiday shopping is probably going to be similar to past years.” He also emphasized that “competition remains intense” amongst the company’s suppliers, which “provides a structural incentive to keep prices as low as possible” on Wayfair’s platform. Wayfair unveils plan to win back customers during the holidays Wayfair expects net revenue to increase by mid-single digits year-over-year during the holiday season this year. Its predictions come during a time when many consumers nationwide are expected to spend a record amount of money on holiday shopping this year; however, more are seeking discounts and deals amid economic concerns. How U.S. consumers plan to shop during the 2025 holiday season: Consumers plan to spend $890.49 per person on average this year on holiday gifts, food, decorations and other seasonal items. Also, 63% of consumers plan to wait until Thanksgiving weekend to do most of their holiday shopping, up from 59% last year. Tariffs are a top concern for holiday shoppers, with 85% expecting tariffs to cause higher prices. Source: National Retail Federation “With more consumers planning to seek out sale events this year, retailers are prepared to deliver on deals and value to ensure consumers have everything they need to make the holiday special,” said Katherine Cullen, National Retail Federation vice president of industry and consumer insights, in a press release. As Wayfair prepares for a bustling holiday season, it plans to increase its use of artificial intelligence to keep customers away from rivals. More Retail: Temu makes bold move to slow down fleeing customers Lululemon CEO raises red flag about customer behavior in stores Home Depot seals billion-dollar acquisition to win back shoppers “We are using generative AI to make the shopping journey more intuitive and personal than ever before,” said Wayfair Chief Technology Officer Fiona Tan during the earnings call. “We think about this as an AI-powered growth flywheel to inspire, engage, learn and personalize. It all starts with inspiration. And we’re using generative AI in multiple ways to help customers discover products they love. We developed Muse, our proprietary AI-powered inspiration and discovery engine, to create shoppable photorealistic room scenes to capture the attention of low-intent customers and Spark discovery.” Tan also said that the company is testing a new AI-powered shopping feature to help customers style rooms in their homes more efficiently. “We are now preparing to test a new generative AI feature called ‘Complete the Look,’” said Tan. “What’s unique here is our proprietary ability to generate a complete styled room scene where the products visualized are directly inspired by real shoppable items in our catalog. This allows customers to move from individual product ideas to a complete shoppable design plan more intuitively than ever before.”
