Industry Research
Renovation Barometer
Anticipation Rises for New Project Inquiries Across Industry
Houzz Barometer shows confidence continues for home construction and design firms
The just-released 2022 Q1 Houzz Renovation Barometer reveals that the confidence level among construction professionals is at its highest point since 2018 and confidence among architecture and design firms is up 1 point compared with the first quarter of 2021. Anticipated project inquiries are among the highest recorded for the construction sector in the history of the Barometer.
“Confidence among businesses in the residential construction and design industry has remained high since the initial shock of the pandemic and continues into 2022,” says Marine Sargsyan, Houzz senior economist. “Businesses are facing product and material shortages and price volatility, lack of labor availability and fluctuations in interest rates, which may be impacting the Recent Business Activity Indicator. That said, even with long wait times, businesses report no respite from pent-up demand, confirming long-standing market fundamentals.”
“Confidence among businesses in the residential construction and design industry has remained high since the initial shock of the pandemic and continues into 2022,” says Marine Sargsyan, Houzz senior economist. “Businesses are facing product and material shortages and price volatility, lack of labor availability and fluctuations in interest rates, which may be impacting the Recent Business Activity Indicator. That said, even with long wait times, businesses report no respite from pent-up demand, confirming long-standing market fundamentals.”
A score higher than 50 indicates that more firms reported increases in their business expectations than reported decreases.
Construction Firms
1. Expectations for business activity increased significantly. The Expected Business Activity Indicator, related to project inquiries and new committed projects, increased to 79 in the first quarter of 2022 from 74 in Q4 2021. Notably, expectations for both project inquiries and new committed projects increased significantly from last quarter (from 73 to 80 and from 74 to 78, respectively).
Build-only remodelers reported a 7-point increase in expectations for project inquiries and new projects (from 76 in Q4 2021 to 83 in Q1 2022). This is the highest reported score by the group in the last five years. Expectations for design-build remodelers also increased significantly (from 71 in Q4 2021 to 75 in Q1 2022).
The Expected Business Activity Indicator for construction firms has increased dramatically from a year ago, with a 9-point increase compared with the first quarter of last year.
The Expected Business Activity Indicator is based on survey questions that ask businesses to report whether they expect the number of project inquiries and new committed 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 expect increases than decreases.
Construction Firms
1. Expectations for business activity increased significantly. The Expected Business Activity Indicator, related to project inquiries and new committed projects, increased to 79 in the first quarter of 2022 from 74 in Q4 2021. Notably, expectations for both project inquiries and new committed projects increased significantly from last quarter (from 73 to 80 and from 74 to 78, respectively).
Build-only remodelers reported a 7-point increase in expectations for project inquiries and new projects (from 76 in Q4 2021 to 83 in Q1 2022). This is the highest reported score by the group in the last five years. Expectations for design-build remodelers also increased significantly (from 71 in Q4 2021 to 75 in Q1 2022).
The Expected Business Activity Indicator for construction firms has increased dramatically from a year ago, with a 9-point increase compared with the first quarter of last year.
The Expected Business Activity Indicator is based on survey questions that ask businesses to report whether they expect the number of project inquiries and new committed 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 expect increases than decreases.
2. Project wait times have slightly decreased. After seven quarters of consecutive increases, the overall backlog for the construction sector has slightly decreased but is still a month (4 weeks) longer than in the same period last year. The average wait time for new midsize projects to begin decreased from 11.7 weeks in Q4 2021 to 11.4 weeks in the first quarter of this year.
Build-only remodelers reported a wait time of 9.5 weeks to take on a new project (down 0.1 week relative to Q4), while the average wait among design-build remodelers was 13.3 weeks (down 0.4 week relative to Q4). Compared with the same period a year ago, the wait times are longer by 2.7 weeks and 5.3 weeks among build-only and design-build firms, respectively.
Build-only remodelers reported a wait time of 9.5 weeks to take on a new project (down 0.1 week relative to Q4), while the average wait among design-build remodelers was 13.3 weeks (down 0.4 week relative to Q4). Compared with the same period a year ago, the wait times are longer by 2.7 weeks and 5.3 weeks among build-only and design-build firms, respectively.
Backlogs range quite a bit by region, as this map shows. The West South Central division of the U.S. (Arkansas, Louisiana, Oklahoma, Texas) has the shortest average wait time (8.1 weeks), while the New England division (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont) has the longest (13.3 weeks).
Backlogs in the construction sector are longer than a year ago across all nine geographic divisions as defined by the U.S. Census Bureau.
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Backlogs in the construction sector are longer than a year ago across all nine geographic divisions as defined by the U.S. Census Bureau.
See more resources for pros in Houzz Pro Learn
A score higher than 50 indicates that more firms reported increases in their recent business activity than reported decreases.
3. Recent business activity declined significantly. A decrease in new project inquiries and new committed projects in October, November and December of last year dropped the Recent Business Activity Indicator of the Barometer to 65 for construction firms, down 8 points from the previous quarter.
The overall recent activity indicator for the construction services sector was driven by a decrease reported by build-only remodelers, who reported a 17-point decrease (58 in Q4 2021, compared with 75 in Q3 2021). Design-build remodelers reported a slight increase in recent activity, to 72 in Q4 2021 (up 1 point from Q3 2021).
Relative to a year ago, the indicator is up 3 points.
The Recent Business Activity Indicator looks at actual activity over the previous three months. In contrast with the Expected Business Activity and Project Backlog indicators, which look forward in time, the Recent Business Activity Indicator looks back. It’s based on survey questions that ask businesses to report whether they observed the actual number of project inquiries and new committed projects increasing, decreasing or staying the same in the previous three months relative to the three months before that. A score higher than 50 indicates that more firms reported increases than decreases.
3. Recent business activity declined significantly. A decrease in new project inquiries and new committed projects in October, November and December of last year dropped the Recent Business Activity Indicator of the Barometer to 65 for construction firms, down 8 points from the previous quarter.
The overall recent activity indicator for the construction services sector was driven by a decrease reported by build-only remodelers, who reported a 17-point decrease (58 in Q4 2021, compared with 75 in Q3 2021). Design-build remodelers reported a slight increase in recent activity, to 72 in Q4 2021 (up 1 point from Q3 2021).
Relative to a year ago, the indicator is up 3 points.
The Recent Business Activity Indicator looks at actual activity over the previous three months. In contrast with the Expected Business Activity and Project Backlog indicators, which look forward in time, the Recent Business Activity Indicator looks back. It’s based on survey questions that ask businesses to report whether they observed the actual number of project inquiries and new committed projects increasing, decreasing or staying the same in the previous three months relative to the three months before that. A score higher than 50 indicates that more firms reported increases than decreases.
Architectural and Design Services Firms
1. Business activity expectations remained steady. Architects and interior designers reported a slight (1-point) decrease in new committed projects from last quarter (67 in Q1 2022 compared with 68 in Q4 2021). Expectations for project inquiries increased slightly, to 71 in Q1 2022 (up 1 point).
The Expected Business Activity Indicator score now stands 1 point higher than it did a year ago, which indicates that architects and interior designers are slightly more optimistic than they were this time last year.
Following tempered expectations in the fourth quarter of last year, interior designers have increased their expectations significantly in Q1 2022, with a 6-point increase in overall expectations, to 70. Architects reported a 4-point decrease in overall expectations, to 68, relative to the start of the fourth quarter of last year.
1. Business activity expectations remained steady. Architects and interior designers reported a slight (1-point) decrease in new committed projects from last quarter (67 in Q1 2022 compared with 68 in Q4 2021). Expectations for project inquiries increased slightly, to 71 in Q1 2022 (up 1 point).
The Expected Business Activity Indicator score now stands 1 point higher than it did a year ago, which indicates that architects and interior designers are slightly more optimistic than they were this time last year.
Following tempered expectations in the fourth quarter of last year, interior designers have increased their expectations significantly in Q1 2022, with a 6-point increase in overall expectations, to 70. Architects reported a 4-point decrease in overall expectations, to 68, relative to the start of the fourth quarter of last year.
2. Wait times decreased nationally but remain elevated compared with a year ago. The Project Backlog Indicator for architectural and design firms averaged 7.9 weeks nationally at the start of the first quarter of 2022, down 1.4 weeks compared with the start of the fourth quarter of last year.
Compared with a year ago, when wait times were 5.6 weeks, wait times are up by 2.3 weeks.
Taking a closer look by professional type, architects reported wait times of 8.7 weeks to take on a new midsize project (up 2.6 weeks relative to Q1 2021). Interior designers reported wait times of 6.6 weeks (up 1.9 weeks relative to Q1 2021).
Compared with a year ago, when wait times were 5.6 weeks, wait times are up by 2.3 weeks.
Taking a closer look by professional type, architects reported wait times of 8.7 weeks to take on a new midsize project (up 2.6 weeks relative to Q1 2021). Interior designers reported wait times of 6.6 weeks (up 1.9 weeks relative to Q1 2021).
Again, backlogs vary by region, as this map shows. The East South Central division of the U.S. (Alabama, Kentucky, Mississippi, Tennessee) has the shortest average wait time (4.7 weeks), while the East North Central division (Illinois, Indiana, Michigan, Ohio, Wisconsin) has the longest (10 weeks).
Compared with the same quarter a year ago, backlogs in the architectural and design services sector are longer across all nine census divisions.
Compared with the same quarter a year ago, backlogs in the architectural and design services sector are longer across all nine census divisions.
3. Recent business activity decreased. Architecture and design firms saw a decline in recent project inquiries and new committed projects in October, November and December of last year. Their score for the Recent Business Activity Indicator of the Barometer decreased to 65, a 5-point drop from the prior three months.
Relative to the same period a year ago, the indicator is up 1 point, which indicates business activity has slightly improved since this time last year.
Relative to the same period a year ago, the indicator is up 1 point, which indicates business activity has slightly improved since this time last year.
The Houzz Renovation Barometer is based on a quarterly online survey sent to a national panel of U.S. businesses with profiles on Houzz. The Barometer includes three components: Expected Business Activity, Recent Business Activity and Project Backlog (or wait times). Expectations and business activity data are smoothed out to allow for predictable seasonal fluctuations, while wait-time data is not.
If you’re a pro and would like to offer your insights on market conditions in your area by joining the Barometer panel, please click here.
Read more on this and past Barometer reports
Tell us: Whether you’re a pro or a homeowner, we’d love to hear how this report compares with your experiences. Please share in the Comments.
More for Pros on Houzz
Read more stories about remodeling trends
Learn about Houzz Pro software
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Join the Houzz Trade Program
If you’re a pro and would like to offer your insights on market conditions in your area by joining the Barometer panel, please click here.
Read more on this and past Barometer reports
Tell us: Whether you’re a pro or a homeowner, we’d love to hear how this report compares with your experiences. Please share in the Comments.
More for Pros on Houzz
Read more stories about remodeling trends
Learn about Houzz Pro software
Talk with your peers in the Pro-to-Pro discussions
Join the Houzz Trade Program
Project Wait Times Remain Elevated Throughout the Country
Backlogs continue to grow across the industry, lengthening the time before pros can begin work on a new project. Home construction and design firms report longer wait times compared with the same quarter a year before. In fact, wait times are the longest among all first quarters since 2018.
The Houzz Renovation Barometer also tracks backlogs across nine census divisions in the U.S. The wait times vary significantly by location, but backlogs are higher across all nine census divisions compared with a year ago.
Read on to find out more about what remodeling industry firms said about current business conditions. We’ll look first at construction companies and then at firms in the architectural and design services areas. We’ll start with what these firms expect for the next three months, then look at their project wait times. Lastly, we’ll review their business activity over the previous three months.
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