Houzz Inc. has released the Q3 2024 Houzz U.S. Renovation Barometer. The report found increases in Q2 business activity compared with Q1 among home remodeling and design professionals.
This is the fourth consecutive quarter-over-quarter increase for architectural and design pros. Notably, it also marks the first positive shift in the construction sector following two years of decline. Businesses across all sectors remain mildly optimistic about activity in the coming quarter.
“Pros report moderately increased activity across the industry, which is particularly significant for the construction sector following a two-year slowdown,” said Marine Sargsyan, Houzz staff economist. “Third-quarter expectations are cautiously optimistic as pros navigate the current political and economic landscape, and face challenges related to costs and availability for labor, products and materials.”
Q3 2024 Architectural and Design Services Sector Barometer
- The Expected Business Activity Indicator related to project inquiries and new committed projects increased to 60 in Q3 (up 2 points from Q2). This is driven by a 5-point increase in expectations for project inquiries, while the new committed project component of the indicator remains flat at 60. Both architects and interior designers report a slight increase in expectations for Q3, up 3 points for architects (57 in Q2 and 60 in Q3) and 1 point for interior designers (59 in Q2 to 60 in Q3).
- The Project Backlog Indicator is 5.7 weeks in the beginning of Q3. Backlogs are down by 0.7 weeks compared with last year (6.4 weeks). This year-over-year decrease is driven by interior designers, who report 2.9 week wait times, down 1.4 weeks from last year. Architects reported a 0.2-week decrease in wait times compared with last year (7.4 weeks).
- The Recent Business Activity Indicator related to project inquiries and new committed projects increased to 60 in Q2 (versus 53 in Q1). This increase is attributed to growth in project inquiries (up 7 points from Q1 to 60) and new committed projects (up 6 points from Q1 to 60). With the indicator at 60 for both architects and interior designers, it shows that more businesses saw improvements in activity than those experiencing slowdowns.
Q3 2024 Construction Sector Barometer
- The Expected Business Activity Indicator related to project inquiries and new committed projects declined 6 points to 52 for Q3 (from 58 in Q2). That said, the index is above 50 points suggesting businesses expect Q3 performance to be better than Q2. Compared with Q2 2024, Q3 expectations for project inquiries decreased 6 points to 52 and new committed projects dropped 5 points to 52.
- The Project Backlog Indicator is 7.6 weeks in the beginning of Q3, which is 5.4 weeks shorter than a year ago. Both build-only and design-build remodelers report decreased wait times compared to Q3 2023 (6.9 and 3.8 weeks shorter, respectively).
- The Recent Business Activity Indicator related to project inquiries and new committed projects increased to 52 in Q2 2024, up 7 points from Q1. This is the first positive sentiment reported since Q3 2022 and is driven by a 9-point increase in project inquiries in Q2, relative to the previous quarter, and a 4-point increase in new committed projects to 52. Design-build remodelers reported the greatest jump in recent business activity (from 40 in Q1 to 51 in Q2), but build-only remodelers also saw an increase (from 50 in Q1 to 53 in Q2).
The quarterly Houzz U.S. Renovation Barometer provides timely insights into the residential renovation industry, including expectations, project backlogs and recent activity among businesses in the U.S. construction and architectural and design services sectors. Scores for each component are computed as a seasonally adjusted diffusion indices on a scale of 0 to 100, with index values over 50 indicating that a greater proportion of firms reported quarter-over-quarter increases than those reporting decreases.
Detailed methodology and underlying quarterly indices for the construction sector and the architectural and design services sector, and other information on market conditions, can be found on houzz.com/research. The Q3 2024 Barometer was fielded June 29 through July 9, 2024, and garnered responses from over 1,200 home improvement firms on Houzz.
