Industry Research
Pros Remain Somewhat Optimistic Despite Slowed Activity
More construction and design firms expect business growth than expect a decline, the Houzz Q2 2024 Barometer shows
Home remodeling and design professionals continue to be mildly optimistic in the second quarter of 2024, with more firms anticipating an increase in business activity than a decrease. This follows a reduction in business activity in the first quarter of the year, with design-build firms affected most strongly. Project backlogs have normalized after record highs during the pandemic.
Those are key findings in the just-released Q2 2024 Houzz Renovation Barometer, which provides timely insights into the residential renovation industry, including expectations, project backlogs and recent activity among businesses in the construction sector and the architectural and design services sector.
“While promising economic conditions and improved product availability bolstered optimism among residential construction and design professionals at the start of the year, the anticipated uptick in activity did not fully materialize,” Houzz staff economist Marine Sargsyan says. “Pros across sectors maintain a hopeful outlook for increased business activity in the coming months. This is reflective of resilient local economies and aligns with positive consumer sentiment nationally.”
Those are key findings in the just-released Q2 2024 Houzz Renovation Barometer, which provides timely insights into the residential renovation industry, including expectations, project backlogs and recent activity among businesses in the construction sector and the architectural and design services sector.
“While promising economic conditions and improved product availability bolstered optimism among residential construction and design professionals at the start of the year, the anticipated uptick in activity did not fully materialize,” Houzz staff economist Marine Sargsyan says. “Pros across sectors maintain a hopeful outlook for increased business activity in the coming months. This is reflective of resilient local economies and aligns with positive consumer sentiment nationally.”
A score higher than 50 indicates that more firms reported an increase in their business expectations than reported a decrease.
Construction Firms
1. Business activity outlook is positive. The overall outlook in the construction sector is optimistic in the second quarter of 2024, with more firms anticipating quarter-over-quarter growth than anticipating a decline. The Expected Business Activity Indicator, related to project inquiries and new committed projects, increased by 1 point, to 58, in Q2, from 57 in the first quarter of 2024.
Build-only remodelers are slightly more optimistic in Q2 than they were in the previous quarter, with an expected business indicator of 58 (compared with 56 in Q1). In contrast, design-build firms’ expectations for business activity declined slightly, to 58 in Q2 (from 59 in Q1).
The indicator is based on survey questions about whether businesses expect the number of project inquiries and new projects to increase, decrease or remain unchanged in the coming three months compared with the previous three months.
Construction Firms
1. Business activity outlook is positive. The overall outlook in the construction sector is optimistic in the second quarter of 2024, with more firms anticipating quarter-over-quarter growth than anticipating a decline. The Expected Business Activity Indicator, related to project inquiries and new committed projects, increased by 1 point, to 58, in Q2, from 57 in the first quarter of 2024.
Build-only remodelers are slightly more optimistic in Q2 than they were in the previous quarter, with an expected business indicator of 58 (compared with 56 in Q1). In contrast, design-build firms’ expectations for business activity declined slightly, to 58 in Q2 (from 59 in Q1).
The indicator is based on survey questions about whether businesses expect the number of project inquiries and new projects to increase, decrease or remain unchanged in the coming three months compared with the previous three months.
2. Project backlogs are shorter than they were a year ago. At the start of Q2 2024, the average backlog across the construction sector is 6.5 weeks nationally. That’s down by 5.4 weeks from Q2 2023 and the same as five years ago (Q2 2019).
Looking at it by reporting group, the wait times are 6.8 weeks for build-only firms (6.4 weeks shorter than a year ago) and 6.2 weeks for design-build firms (4.3 weeks shorter than a year ago).
The Backlog Indicator is based on survey questions that ask businesses to report wait times (in weeks) to start work on a midsize project. Scores are computed as average wait times without a seasonal adjustment.
Looking at it by reporting group, the wait times are 6.8 weeks for build-only firms (6.4 weeks shorter than a year ago) and 6.2 weeks for design-build firms (4.3 weeks shorter than a year ago).
The Backlog Indicator is based on survey questions that ask businesses to report wait times (in weeks) to start work on a midsize project. Scores are computed as average wait times without a seasonal adjustment.
Geographically, backlogs for the construction sector vary significantly, from 4.1 weeks in the West South Central division (Arkansas, Louisiana, Oklahoma and Texas) to 9 weeks in the New England division (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont).
Across all nine census divisions, backlogs are shorter than they were a year ago.
Across all nine census divisions, backlogs are shorter than they were a year ago.
A score lower than 50 indicates that more firms reported a decrease in their recent business activity than reported an increase.
3. Recent business activity has decreased. The Recent Business Activity Indicator, which is related to project inquiries and new committed projects, dropped by 3 points, to 45, in Q1 2024, down from 48 in Q4 2023. This was driven by a 4-point decline in project inquiries, to 43, in Q1 (from 47 in Q4) and a 2-point decrease in new committed projects, to 48, in Q1 (from 50 in Q4).
For build-only remodelers, recent business activity decreased by 3 points, to 50, in Q1 (from 53 in Q4). Design-build remodelers also reported a 3-point decrease in recent business activity, to 40, in Q1 (from 43 in Q4).
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 about whether businesses observed an increase, a decrease or no change in the actual number of project inquiries and new committed projects over the previous three months relative to the three months prior.
3. Recent business activity has decreased. The Recent Business Activity Indicator, which is related to project inquiries and new committed projects, dropped by 3 points, to 45, in Q1 2024, down from 48 in Q4 2023. This was driven by a 4-point decline in project inquiries, to 43, in Q1 (from 47 in Q4) and a 2-point decrease in new committed projects, to 48, in Q1 (from 50 in Q4).
For build-only remodelers, recent business activity decreased by 3 points, to 50, in Q1 (from 53 in Q4). Design-build remodelers also reported a 3-point decrease in recent business activity, to 40, in Q1 (from 43 in Q4).
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 about whether businesses observed an increase, a decrease or no change in the actual number of project inquiries and new committed projects over the previous three months relative to the three months prior.
A score higher than 50 indicates that more firms reported an increase in their business expectations than reported a decrease.
Architectural and Design Firms
1. Business activity expectations are tempered. In the architectural and design services sector, the Expected Business Activity Indicator decreased to 58 in Q2 2024. That’s still above the 50-point mark but a drop of 8 points from the previous quarter (66). This shift in expectations follows three consecutive quarters of growth in expected business activity among architectural and design services pros. It was driven by an 11-point decline in expectations for project inquiries and a 6-point decline in new projects in Q2.
Taking a closer look, architects and interior designers both report lower expectations for Q2. The indicator decreased by 10 points for architects, to 57, in Q2 (from 67 in Q1) and by 4 points for interior designers, to 59, in Q2 (from 63 in Q1).
Architectural and Design Firms
1. Business activity expectations are tempered. In the architectural and design services sector, the Expected Business Activity Indicator decreased to 58 in Q2 2024. That’s still above the 50-point mark but a drop of 8 points from the previous quarter (66). This shift in expectations follows three consecutive quarters of growth in expected business activity among architectural and design services pros. It was driven by an 11-point decline in expectations for project inquiries and a 6-point decline in new projects in Q2.
Taking a closer look, architects and interior designers both report lower expectations for Q2. The indicator decreased by 10 points for architects, to 57, in Q2 (from 67 in Q1) and by 4 points for interior designers, to 59, in Q2 (from 63 in Q1).
2. Project backlogs are slightly shorter than a year ago. Architectural and design service firms have seen a slight reduction in wait times. The Project Backlog Indicator is 5.6 weeks at the beginning of Q2 — 0.5 weeks shorter than a year ago and 0.9 weeks longer than five years ago (Q2 2019), when it was 4.7 weeks.
The year-over-year decrease is driven by architects, whose backlog is 6.2 weeks, down by 0.8 weeks from Q2 2023. Conversely, at 4.7 weeks, interior designers’ wait times are 0.1 weeks longer than they were a year ago.
Learn about Houzz Pro software
The year-over-year decrease is driven by architects, whose backlog is 6.2 weeks, down by 0.8 weeks from Q2 2023. Conversely, at 4.7 weeks, interior designers’ wait times are 0.1 weeks longer than they were a year ago.
Learn about Houzz Pro software
Backlogs in the architectural and design services sector vary widely geographically.
Businesses in the East South Central division (including Alabama, Tennessee, Kentucky and Mississippi) reported the shortest average backlog, 2.8 weeks. The Middle Atlantic division (New York, New Jersey and Pennsylvania) reported the longest backlog, 9.3 weeks. An 11.9-week backlog reported by architects in the Middle Atlantic (versus the 4.9 weeks reported by interior designers) is driving the long wait time in that division.
Compared with the same quarter a year ago, backlogs for the architectural and design services sector are shorter across seven of the nine census divisions (all but the Middle Atlantic and South Atlantic divisions).
Businesses in the East South Central division (including Alabama, Tennessee, Kentucky and Mississippi) reported the shortest average backlog, 2.8 weeks. The Middle Atlantic division (New York, New Jersey and Pennsylvania) reported the longest backlog, 9.3 weeks. An 11.9-week backlog reported by architects in the Middle Atlantic (versus the 4.9 weeks reported by interior designers) is driving the long wait time in that division.
Compared with the same quarter a year ago, backlogs for the architectural and design services sector are shorter across seven of the nine census divisions (all but the Middle Atlantic and South Atlantic divisions).
A score higher than 50 indicates that more firms reported an increase in their recent business activity than reported a decrease.
3. Recent business activity declined slightly. The overall Recent Business Activity Indicator related to project inquiries and new committed projects for the architectural and design services sector decreased by just 1 point, to 53, in Q1 2024 versus Q4 2023. This is attributed to a 3-point reduction in new committed projects, to 54, in Q1 (from 57 in Q4). Recent project inquiries, however, are up by 2 points, to 53, in Q1 (from 51 in Q4).
The Recent Business Activity Indicator was at 54 for architects and 52 for interior designers in Q1, which means more businesses in these groups experienced an improvement in activity than experienced a slowdown.
3. Recent business activity declined slightly. The overall Recent Business Activity Indicator related to project inquiries and new committed projects for the architectural and design services sector decreased by just 1 point, to 53, in Q1 2024 versus Q4 2023. This is attributed to a 3-point reduction in new committed projects, to 54, in Q1 (from 57 in Q4). Recent project inquiries, however, are up by 2 points, to 53, in Q1 (from 51 in Q4).
The Recent Business Activity Indicator was at 54 for architects and 52 for interior designers in Q1, which means more businesses in these groups experienced an improvement in activity than experienced a slowdown.
The Houzz Renovation Barometer is based on a quarterly online survey sent to a national panel of U.S. businesses with online profiles on Houzz. 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 (including more detailed subsector and regional data).
Tell us: How does this report compare with your experiences? Please share in the Comments.
More for Pros on Houzz
Read more stories for pros
Learn about Houzz Pro software
Talk with your peers in pro-to-pro discussions
Join the Houzz Trade Program
Read more on this and past Barometer reports (including more detailed subsector and regional data).
Tell us: How does this report compare with your experiences? Please share in the Comments.
More for Pros on Houzz
Read more stories for pros
Learn about Houzz Pro software
Talk with your peers in pro-to-pro discussions
Join the Houzz Trade Program
Here’s what remodeling and design industry professionals are saying about current residential renovation market conditions.
See how Houzz Pro can help you find customers, manage projects and grow your business