Home Remodeling and Design Professionals Remain Mildly Optimistic Despite Slower Activity

Houzz Inc., a leading platform for home remodeling and design, including project management software for industry professionals, today released the Q2 2024 Houzz US Renovation Barometer. The quarterly Barometer provides timely insights into the residential renovation industry, including expectations, project backlogs and recent activity among businesses in the US construction and architectural and design services sectors. More professionals anticipate business growth than declines in the second quarter of 2024, with the Expected Business Activity Indicator reaching 58 points for both sectors. This mild optimism follows reduced quarterly activity reported across sectors with design-build firms impacted most significantly.  

Snapshot of Findings

“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,” said Marine Sargsyan, Houzz staff economist. “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.”  

Backlogs for new, mid-sized projects have normalized following record highs during the pandemic. In the construction sector, backlogs are currently at 6.5 weeks, which is 5.4 weeks shorter than the same period last year (11.9 weeks in Q2 2023), matching levels from five years ago (6.5 weeks in Q2 2019). In a similar trend, the architectural and design services sector saw a marginal reduction in wait times to 5.6 weeks, slightly less than this time last year (6.1 weeks), and 0.9 weeks longer than 4.7 weeks in Q2 2019.

Q2 Construction Sector Barometer

The overall outlook in the construction sector is favorable with more firms expecting business activity to improve than to slow down. Build-only firms are slightly more optimistic than last quarter with an expected business indicator of 58 points in Q2 (compared with 56 in Q1). In contrast, design-build remodelers anticipate slightly lower activity than the previous quarter (58 in Q2 versus 59 in Q1). Overall, both business groups expect Q2 business activity to be better than Q1. 

• The Expected Business Activity Indicator related to project inquiries and new committed projects increased one point to 58 for Q2 (from 57 in Q1), showing that more businesses expect quarter-over-quarter increases than quarter-over-quarter decreases. Compared to Q1 2024, Q2 expectations for project inquiries increased one point to 58 and new committed projects dropped one point to 57. 

• The Project Backlog Indicator is 6.5 weeks in the beginning of Q2, which is 5.4 weeks shorter than a year ago. Both build-only and design-build remodelers report decreased wait times compared to Q2 2023 (6.4 and 4.3 weeks shorter, respectively).

• The Recent Business Activity Indicator related to project inquiries and new committed projects dropped to 45 in Q1 2024, down 3 points from Q4 2023. This is driven by a 4-point decrease in project inquiries in Q1 2024, relative to the previous quarter, and a 2-point decrease in new committed projects to 48. Both remodeler groups report a 3-point decline in business activity: from 53 in Q4 2023 to 50 in Q1 2024 for build-only remodelers and from 43 in Q4 2023 to 40 for design-build remodelers.

Q2 2024 Architectural and Design Services Sector

The outlook among pros in the architectural and design services sector is weaker in Q2 2024 (58) than the previous quarter (66), but still above the 50-point mark, signaling that more firms expect business activity to improve than those expecting slowdowns. This is a shift following three consecutive quarters of growth in expected business activity. 

• The Expected Business Activity Indicator related to project inquiries and new committed projects decreased to 58 in Q2 (down 8 points from Q1). This is driven by an 11-point decline in expectations for project inquiries and a 6-point decrease in new projects (to 55 and 60 points, respectively) in Q2 2024. Both architects and interior designers report a drop in expectations for Q2, with the indicator decreasing by 10 points for architects (67 in Q1 and 57 in Q2) and by 4 points for interior designers (63 in Q1 and 59 in Q2).

• The Project Backlog Indicator is 5.6 weeks in the beginning of Q2. Backlogs are down by 0.5 weeks compared with last year (6.1 weeks), and are 0.9 weeks longer than they were five years ago in Q2 2019 (4.7 weeks). This year-over-year decrease is driven by architects, who report 6.2 week wait times, down 0.8 weeks from last year. Interior designers reported a 0.1 week increase in wait times compared with last year (4.6 weeks).

• The Recent Business Activity Indicator related to project inquiries and new committed projects decreased slightly to 53 in Q1 (versus 54 in Q4 2023). This decrease is attributed to a drop in new committed projects to 54 (down 3 points from Q4 2023), while project inquiries are up 2 points to 53. With the indicator at 54 for architects and 52 for interior designers, it shows that more businesses in these groups saw improvements in activity than those experiencing slowdowns.

Methodology

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 Q2 2024 Barometer was fielded March 15 through April 4, 2024, and garnered responses from over 1,000 home improvement firms on Houzz.