Houzz Inc.has released the Q2 2021 Houzz Renovation Barometer, which tracks residential renovation market expectations, project backlogs and recent activity among businesses in the construction sector and the architectural and design services sector in the U.S. The Houzz Barometer reveals confidence among residential construction and design businesses for home renovation activity in the second quarter of the year, following a strong first quarter.
“The Barometer points to strong market conditions, diminishing the uncertainty experienced by residential remodeling and design businesses just one year ago,” said Marine Sargsyan, Houzz Senior Economist. “Following a busy first quarter, businesses are faced with soaring homeowner demand along with lengthy permitting timelines, supply chain constraints and unrelenting labor shortages. These constraints likely contribute to industry-wide wait times of more than two months before a business can begin a new project.”
Q2 2021 Construction Sector Barometer
The Expected Business Activity Indicator related to project inquiries and new committed projects increased to 73 in Q2 (compared to 70 in Q1). Expectations for project inquiries grew significantly to 75 compared to 70 in Q1 and new committed projects rose slightly to 70 (up one point relative to Q1).
The Project Backlog Indicator increased to 9.3 weeks in Q2, which is nearly a month longer than a year ago (5.4 weeks). Wait times are the highest reported for the sector since July 2018.
The Recent Business Activity Indicator related to project inquiries and new committed projects increased substantially to 73 in Q1 (compared to 62 in Q4, 2020). This is driven by growth in project inquiries, which increased to 79 in Q1 (up 19 points relative to Q4, 2020), and by a rise in new committed projects to 67 (up four points relative to Q4, 2020).
Q2 2021 Architectural and Design Services Sector Barometer
The Expected Business Activity Indicator related to project inquiries and new committed projects increased to 74 in Q2 (compared to 68 in Q1). Expectations also increased for project inquiries to 77 (up nine points, compared to Q1) and slightly decreased for new committed projects to 70 in Q2 (down one point compared to Q1).
The Project Backlog Indicator increased to 8.4 weeks in Q2, which is more than a month longer than a year ago (3.6 weeks). Record wait times are driven by the highest reported backlogs by architecture firms since the Houzz Barometer began tracking this information in July 2017.
The Recent Business Activity Indicator related to project inquiries and new committed projects increased substantially to 75 in Q1 (compared to 64 in Q4, 2020), the highest reported business activity for the sector since launching the Houzz Barometer in 2015. This is driven by a jump in project inquiries to 76 (up 12 points in Q1 relative to Q4, 2020), and an increase in new committed projects to 75 (up 11 points relative to Q4, 2020).
COVID-19’s Influence on Home Renovation and Design Businesses
Home renovation and design businesses have continued to respond to pandemic-related business challenges by implementing new tools and practices.
Approximately one third of businesses in the architectural and design services sector, as well as the construction sector, have increasingly adopted online invoicing and payments (38 and 31 percent in Q2 2021, versus 33 and 24 percent in Q3 2020, respectively).
Architecture and design firms reported that the top three activities they implemented in response to pandemic-related challenges included video consultations, new safety guidelines at the office and worksite and remote collaboration tools (57, 51 and 47 percent, respectively).
Construction businesses reported that the top three activities they adopted in response to pandemic-related challenges included new safety guidelines, online product sourcing and digital tools for document and contract approvals (59, 35 and 35 percent, respectively).
“The pandemic accelerated the adoption of online tools like our Houzz Pro business management and marketing software, which offers remote collaboration solutions such as video meetings, online invoicing and electronic payments, to help residential design and construction firms connect with customers and move projects forward safely and easily,” said Liza Hausman, Houzz Vice President of Industry Marketing. “As renovation project demand surges, businesses are turning to software to help them better manage both the influx of new project inquiries and the resulting projects. Growth in use of the Houzz Pro CRM tool in particular has nearly tripled over the past eight months.”
