Industry Research
Inside Houzz
2018 Was Good to Firms in Home Remodeling and Decorating
Revenue was up but grew at a slower pace than in previous years, the 2019 U.S. Houzz State of the Industry study reveals
The results are in, and 2018 was another good year for firms in the residential remodeling and decorating industry, according to new data from Houzz. Revenue (total sales) increased for three out of five firms, and profit was up for half the companies. However, revenue growth slowed across the industry.
The 2019 U.S. Houzz State of the Industry study includes responses from more than 4,700 firms in the residential remodeling and decorating industry. Read on to find out what business was like for your fellow professionals last year.
The 2019 U.S. Houzz State of the Industry study includes responses from more than 4,700 firms in the residential remodeling and decorating industry. Read on to find out what business was like for your fellow professionals last year.
Revenue Grew in 2018 but at a Slower Rate
A majority of firms (three in five) reported that revenue increased in 2018 compared with 2017. But all seven industry groups experienced a slowing of average annual revenue growth last year, with the rate ranging from 5.6 percent to 8.2 percent in 2018, compared with 7.2 percent to 11.3 percent in 2017. Average annual revenue growth rates in 2018 were the lowest they’ve been in five years.
More companies (35 percent to 42 percent across the sectors) reported that 2018 missed expectations; in 2017, the percentage of firms reporting missed expectations was 26 percent to 42 percent.
A majority of firms (three in five) reported that revenue increased in 2018 compared with 2017. But all seven industry groups experienced a slowing of average annual revenue growth last year, with the rate ranging from 5.6 percent to 8.2 percent in 2018, compared with 7.2 percent to 11.3 percent in 2017. Average annual revenue growth rates in 2018 were the lowest they’ve been in five years.
More companies (35 percent to 42 percent across the sectors) reported that 2018 missed expectations; in 2017, the percentage of firms reporting missed expectations was 26 percent to 42 percent.
Profit Was Up for Half of Firms
More than half of interior design firms (54 percent), decorating specialty firms (51 percent) and landscaping and outdoor specialty firms (51 percent) reported that profit increased in 2018 compared with the prior year. Profit is the money left over after paying the costs of doing business, such as labor, materials and overhead.
Nearly half of firms in the remaining sectors — general contractors, remodelers and builders (49 percent); design-build firms (49 percent); architects (48 percent); and building and renovation specialty firms (48 percent) — reported that profit was up last year.
More than half of interior design firms (54 percent), decorating specialty firms (51 percent) and landscaping and outdoor specialty firms (51 percent) reported that profit increased in 2018 compared with the prior year. Profit is the money left over after paying the costs of doing business, such as labor, materials and overhead.
Nearly half of firms in the remaining sectors — general contractors, remodelers and builders (49 percent); design-build firms (49 percent); architects (48 percent); and building and renovation specialty firms (48 percent) — reported that profit was up last year.
It’s worth noting that a greater share of firms reported revenue increases than reported profit increases. This means that while revenue (sales) grew for many firms, profit did not keep pace. With the costs of doing business rising (see next chart), that isn’t surprising.
Business Costs Rose in 2018
Firms on the construction side of the remodeling industry continue to be hit hard by the rising costs of doing business — more than three in four (76 percent to 81 percent) reported increases in 2018. But the rising costs are affecting every sector of the remodeling and decorating industry, as this chart shows.
For construction firms as well as interior designers, the No. 1 driver of increased business costs was the rising cost of products and materials. For architects as well as landscaping and outdoor specialty firms, it was employee wages and benefits.
Firms on the construction side of the remodeling industry continue to be hit hard by the rising costs of doing business — more than three in four (76 percent to 81 percent) reported increases in 2018. But the rising costs are affecting every sector of the remodeling and decorating industry, as this chart shows.
For construction firms as well as interior designers, the No. 1 driver of increased business costs was the rising cost of products and materials. For architects as well as landscaping and outdoor specialty firms, it was employee wages and benefits.
Many Firms Hired Anyway
Even with revenue growth slowing down, many firms in the remodeling industry hired people in 2018. About one-third of general contractor, remodeler and builder firms, design-build firms and construction specialty firms increased their employee count last year, according to the report.
Even with revenue growth slowing down, many firms in the remodeling industry hired people in 2018. About one-third of general contractor, remodeler and builder firms, design-build firms and construction specialty firms increased their employee count last year, according to the report.
Most Firms’ Annual Sales Were Below $3 Million
The residential remodeling and decorating industry is made up primarily of small businesses. Most firms on Houzz reported annual gross revenue (annual sales) below $3 million for 2018. In fact, more than 70 percent of architects, interior design firms and decorating specialty firms reported annual gross revenue of less than half a million dollars.
Most firms in the industry, regardless of their niche, have four employees or fewer or are one-person businesses.
The residential remodeling and decorating industry is made up primarily of small businesses. Most firms on Houzz reported annual gross revenue (annual sales) below $3 million for 2018. In fact, more than 70 percent of architects, interior design firms and decorating specialty firms reported annual gross revenue of less than half a million dollars.
Most firms in the industry, regardless of their niche, have four employees or fewer or are one-person businesses.
Profit From a Midsize Project Varied Widely
More than half of general contractors, remodelers and builders (58 percent) and design-build firms (61 percent) reported that a midsize project brought in more than $50,000 in gross revenue, or total sales, for that project. Fifty-nine percent of general contractor, remodeler and builder firms and 63 percent of design-build firms also reported that a midsize project yielded more than $10,000 in gross profit.
A smaller share (36 percent) of interior designers and decorating specialty firms (13 percent) said a midsize project generated more than $50,000 in gross revenue. For these firms, projects tended to yield smaller revenue and profit. Forty-two percent of interior design firms and 14 percent of decorating specialty firms reported that a midsize project resulted in more than $10,000 in gross profit.
The 2019 U.S. Houzz State of the Industry study includes responses from 4,780 firms on Houzz that offer services primarily related to residential renovation or design. The survey was fielded from Dec. 10, 2018, to Jan. 10, 2019.
Download the study
More on Houzz
Remodeling Pros Are Optimistic About 2019
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More than half of general contractors, remodelers and builders (58 percent) and design-build firms (61 percent) reported that a midsize project brought in more than $50,000 in gross revenue, or total sales, for that project. Fifty-nine percent of general contractor, remodeler and builder firms and 63 percent of design-build firms also reported that a midsize project yielded more than $10,000 in gross profit.
A smaller share (36 percent) of interior designers and decorating specialty firms (13 percent) said a midsize project generated more than $50,000 in gross revenue. For these firms, projects tended to yield smaller revenue and profit. Forty-two percent of interior design firms and 14 percent of decorating specialty firms reported that a midsize project resulted in more than $10,000 in gross profit.
The 2019 U.S. Houzz State of the Industry study includes responses from 4,780 firms on Houzz that offer services primarily related to residential renovation or design. The survey was fielded from Dec. 10, 2018, to Jan. 10, 2019.
Download the study
More on Houzz
Remodeling Pros Are Optimistic About 2019
Read more industry news
Read more stories for pros
The next three categories were different types of specialty firms. Building and renovation specialty firms include pros such as carpenters and cabinet installers. Landscaping and outdoor specialty firms include pros like landscape architects and pavers. Decorating specialty firms include such pros as decorators and providers of window coverings.