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Data Watch: Renovation Firms Continue Long Optimistic Streak
Though cool weather brings an expected seasonal slowdown, firms report strong optimism at the end of third-quarter 2017
Renovation professionals feel strongly optimistic about the demand for their services in the third quarter of 2017, according to the latest Houzz Renovation Barometer report. The quarterly index tracks optimism among architects, designers, general contractors and remodelers, design-build firms, building and renovation specialty firms, and landscape and outdoor specialty firms.
Architects and designers are feeling confident. Architecture firms posted a reading of 62 for the third quarter of 2017; designer firms, 65. Both scores are slightly below the levels for these groups during the second quarter of 2017, but that is to be expected given the shift of the seasons. The scores for architects and designers are close to the levels of one year earlier, indicating fairly stable demand.
General contractors and remodelers posted high scores. General contractors and remodelers posted a reading of 71, and design-build firms 67, in the third quarter of this year. Both scores dipped a bit from the second quarter, but again, that is to be expected with the shift in seasons.
The scores for general contractors and remodelers and design-build firms are pretty close to those of a year ago, indicating fairly stable demand on a year-over-year basis.
The scores for general contractors and remodelers and design-build firms are pretty close to those of a year ago, indicating fairly stable demand on a year-over-year basis.
Specialty firms also report optimism. Building and renovation specialty firms posted a score of 72 during the third quarter of 2017. Building and renovation specialty firms include replacement contractors (for example, carpenters) and product installers, manufacturers and resellers (of cabinetry, for example).
Landscape and outdoor specialty firms recorded a score of 65. Landscape and outdoor specialty firms include landscape architects, designers and contractors; outdoor replacement trades such as pavers; and outdoor product installers, manufacturers and resellers of items such as pools and spas.
On a year-over-year basis, these scores, as for the other industry sectors, indicate stable demand.
Landscape and outdoor specialty firms recorded a score of 65. Landscape and outdoor specialty firms include landscape architects, designers and contractors; outdoor replacement trades such as pavers; and outdoor product installers, manufacturers and resellers of items such as pools and spas.
On a year-over-year basis, these scores, as for the other industry sectors, indicate stable demand.
Score for size of architects’ new projects bounces back. This chart shows the components of the Houzz Renovation Barometer: number of inquiries, number of new projects or orders, and size of new projects or orders. In each category, a score above 50 means that there are more firms reporting that business activity is higher than there are firms reporting it is lower, relative to the previous quarter. The barometer, described above, is a simple average of the scores for the three components.
The scores in this chart are for architects and designers. Notably, the score for the size of architects’ new projects or orders is up compared with the scores of both the previous quarter and the same quarter during the previous year.
The scores in this chart are for architects and designers. Notably, the score for the size of architects’ new projects or orders is up compared with the scores of both the previous quarter and the same quarter during the previous year.
Design-build firms’ score dips for number of new projects. On a year-over-year basis, the score for the number of design-build firms’ new projects or orders dropped by three points. Despite that dip, scores for both design-build firms and general contractors and remodelers remain strong, in the mid- to high 60s and low 70s for both groups across all three components of the barometer.
Outdoor firms’ scores drop as colder weather looms. On a year-over-year basis, the scores for outdoor specialty firms for all three components of the barometer are close to flat.
Compared with the second quarter of 2017, scores for all three components of the barometer for outdoor specialty firms have dipped. But this is to be expected as demand typically heats up during the spring and summer and then falls as the calendar shifts to the cooler months.
Compared with the second quarter of 2017, scores for all three components of the barometer for outdoor specialty firms have dipped. But this is to be expected as demand typically heats up during the spring and summer and then falls as the calendar shifts to the cooler months.
Northeast back on track. Notably, firms in the Northeast had a boost in optimism during the third quarter compared to one year earlier, with scores rising for all sectors other than architects. The boost signals an acceleration in midyear activity, after winter storms in the Northeast contributed to a drop in confidence scores for renovation firms in the first quarter of the year. The increased confidence in the Northeast could be due to a number of factors, and it’s hard to know which is the primary one, says Nino Sitchinava, Houzz’s principal economist.
“We may be seeing homeowners playing catch-up late in the year in preparation for the upcoming winter,” Sitchinava says. “Alternatively, we may be picking up on a broader acceleration due to more fundamental demographic and housing shifts, such as more millennials entering homeownership, and greater frequency of projects due to increasingly aging housing stock in the Northeast.”
The Houzz Renovation Barometer survey was fielded Sept. 28 to Oct. 12, 2017, and responses were received from 2,241 professionals.
More
Download the full Houzz Renovation Barometer Q3 2017 report
Compare this quarter’s scores with those from Q2 2017
“We may be seeing homeowners playing catch-up late in the year in preparation for the upcoming winter,” Sitchinava says. “Alternatively, we may be picking up on a broader acceleration due to more fundamental demographic and housing shifts, such as more millennials entering homeownership, and greater frequency of projects due to increasingly aging housing stock in the Northeast.”
The Houzz Renovation Barometer survey was fielded Sept. 28 to Oct. 12, 2017, and responses were received from 2,241 professionals.
More
Download the full Houzz Renovation Barometer Q3 2017 report
Compare this quarter’s scores with those from Q2 2017
As the housing supply has tightened and prices have risen in the wake of the 2008 financial crisis, many people have chosen to remodel their existing homes rather than move to new ones, and that has been an ongoing boon to the renovation industry.