Inside Houzz
Renovation Barometer
Industry Research
Remodeling and Design Firms Expect Steady Demand This Quarter
The Q2 Houzz Renovation Barometer also shows that U.S. firms now have shorter project backlogs than a year ago
As we head into the second three months of 2019, many firms — on both the construction side and the architectural and design side of the residential remodeling industry — have positive short-term expectations, new data from Houzz reveal. Wait times for these firms to take on a new midsize project, however, are notably dropping.
As a home remodeling or design pro, you can benefit from having a pulse on market conditions, since factors that affect pros in other specialties can also affect your business. The Q2 2019 Houzz Renovation Barometer tracks residential renovation market expectations, project wait times and recent business activity based on responses from more than 2,000 small businesses on Houzz.
As a home remodeling or design pro, you can benefit from having a pulse on market conditions, since factors that affect pros in other specialties can also affect your business. The Q2 2019 Houzz Renovation Barometer tracks residential renovation market expectations, project wait times and recent business activity based on responses from more than 2,000 small businesses on Houzz.
Construction Firms
1. Business activity expectations are up overall. Build-only remodelers, design-and-build remodelers and specialty trade contractors working on upgrades to existing homes anticipate an uptick in new projects, as well as inquiries from would-be clients about new projects, for the second three months of 2019. The Expected Business Activity Indicator (one component of the Barometer) for construction firms rose to 74, up 3 points compared with a year ago. Relative to the first quarter of 2019, this indicator is also up 2 points.
The Expected Business Activity Indicator is based on survey questions that asked businesses to report whether they expect the number of project inquiries and new projects to increase, decrease or be unchanged in the coming three months compared with the prior three months. A score higher than 50 indicates that more firms reported increases than decreases.
1. Business activity expectations are up overall. Build-only remodelers, design-and-build remodelers and specialty trade contractors working on upgrades to existing homes anticipate an uptick in new projects, as well as inquiries from would-be clients about new projects, for the second three months of 2019. The Expected Business Activity Indicator (one component of the Barometer) for construction firms rose to 74, up 3 points compared with a year ago. Relative to the first quarter of 2019, this indicator is also up 2 points.
The Expected Business Activity Indicator is based on survey questions that asked businesses to report whether they expect the number of project inquiries and new projects to increase, decrease or be unchanged in the coming three months compared with the prior three months. A score higher than 50 indicates that more firms reported increases than decreases.
2. Project wait times have dropped nationally. Construction businesses focused on remodeling reported that wait times before they can take on a midsize project from a new client are now nearly five weeks shorter than a year ago — a significant drop in construction firms’ project backlogs. Average national wait times were 9.9 weeks a year ago and are now 5 weeks, meaning that wait times have dropped by 4.9 weeks.
Compared with the first quarter of 2019, projected wait times for the second quarter of 2019 rose by 0.2 week. At the beginning of the year, expected wait times were 4.8 weeks, according to the Barometer’s Backlog Indicator for this group.
Among the construction firms, build-only remodelers have the longest average wait times before they can take on a midsize project: 7 weeks, down 0.5 week from the previous three months. Specialty trade contractors, such as those that do masonry, painting or electrical work, have the shortest project wait times, at 3.8 weeks. Wait times for design-and-build remodelers are 6 weeks.
Compared with the first quarter of 2019, projected wait times for the second quarter of 2019 rose by 0.2 week. At the beginning of the year, expected wait times were 4.8 weeks, according to the Barometer’s Backlog Indicator for this group.
Among the construction firms, build-only remodelers have the longest average wait times before they can take on a midsize project: 7 weeks, down 0.5 week from the previous three months. Specialty trade contractors, such as those that do masonry, painting or electrical work, have the shortest project wait times, at 3.8 weeks. Wait times for design-and-build remodelers are 6 weeks.
3. Recent business activity has dropped year over year. A drop in new-project inquiries and new projects in January, February and March pushed the Recent Business Activity component of the Barometer to 67 for construction firms, down 5 points from 72 compared with the same period a year earlier. Relative to the prior three months, this indicator is flat. The Recent Business Activity component looks at actual activity over the past three months.
“Home professionals attribute the slowdown to unusually cold and wet weather conditions, in addition to consumer apprehension caused by the government shutdown, tax refund uncertainty, and the high costs of products and materials,” Sitchinava says. “Despite many of these concerns, the business outlook for the next three months is upbeat, with many anticipating an increased demand for exterior upgrades necessitated by winter storms.”
In contrast with the Expected Business Activity and Project Backlog indicators, which look forward in time, the Recent Business Activity Indicator looks back in time. It is based on survey questions that ask businesses to report whether they observed the actual number of project inquiries and new projects increasing, decreasing or staying the same in the past three months relative to the prior three months.
“Home professionals attribute the slowdown to unusually cold and wet weather conditions, in addition to consumer apprehension caused by the government shutdown, tax refund uncertainty, and the high costs of products and materials,” Sitchinava says. “Despite many of these concerns, the business outlook for the next three months is upbeat, with many anticipating an increased demand for exterior upgrades necessitated by winter storms.”
In contrast with the Expected Business Activity and Project Backlog indicators, which look forward in time, the Recent Business Activity Indicator looks back in time. It is based on survey questions that ask businesses to report whether they observed the actual number of project inquiries and new projects increasing, decreasing or staying the same in the past three months relative to the prior three months.
Architectural and Design Services Firms
1. Firms expect positive business activity. Like construction firms, architects and interior designers expect renovation business activity to rise during the second three months of 2019 from a year ago. Their score of 70 for the Expected Business Activity Indicator shows that there are more firms that anticipate increases than those that anticipate decreases. This score is up a dramatic 16 points from the same period a year ago, and up 5 points from the first three months of 2019.
1. Firms expect positive business activity. Like construction firms, architects and interior designers expect renovation business activity to rise during the second three months of 2019 from a year ago. Their score of 70 for the Expected Business Activity Indicator shows that there are more firms that anticipate increases than those that anticipate decreases. This score is up a dramatic 16 points from the same period a year ago, and up 5 points from the first three months of 2019.
2. Wait times have decreased nationally. The Backlog Indicator for architectural and design firms stayed at an average of 4.7 weeks nationally for the second three months of the year, a drop of 1.4 weeks from the same time period in 2018. Compared with the first quarter of 2019, wait times are flat for the second three months of 2019. Architects currently have shorter wait times to take on a new midsize project (4.4 weeks) compared with interior designers (5.2 weeks).
3. Recent business activity is up year over year. An increase in new-project inquires and new projects in January through March lifted the Recent Business Activity Indicator for this sector for the first quarter of 2019 to 63, up 16 points compared with the first quarter of 2018. However, relative to the prior three months, this score is down 2 points.
The Houzz Renovation Barometer is based on a quarterly online survey sent to a national panel of U.S. businesses with a profile on Houzz. The Barometer includes three components: expected business activity, recent activity and backlogs (or wait times). Expectations and business activity data are smoothed out to allow for predictable seasonal fluctuations, while wait-time data are not.
The Q2 2019 Houzz Renovation Barometer garnered responses from 2,065 firms and was fielded from March 28, 2019, through April 10, 2019.
If you would like to offer your insights on market conditions in your area by joining the Barometer panel, please click here.
Read more Barometer reports
Tell us: How does this report compare with your firm’s experience? Please share in the Comments.
The Q2 2019 Houzz Renovation Barometer garnered responses from 2,065 firms and was fielded from March 28, 2019, through April 10, 2019.
If you would like to offer your insights on market conditions in your area by joining the Barometer panel, please click here.
Read more Barometer reports
Tell us: How does this report compare with your firm’s experience? Please share in the Comments.
Read on for a current snapshot of the remodeling industry, based on the analysis of firms active in the industry now. We’ll start with construction firms and then move on to firms in the architectural and design services areas.