Expectations vary among home remodeling and design professionals, a Houzz survey found

Expectations vary among home remodeling and design professionals, a Houzz survey found


Furniture World News Desk On 11/1/2023


Houzz Inc., the leading home remodeling and design platform, including project management software for industry professionals, today released the Houzz US Renovation Barometer for Q4 2023. The barometer tracks residential renovation market outlook, project backlog and recent activity among companies in the construction sector In the United States, the architectural and design services sector. Published from September 30 through October 12, 2023, the Barometer provides timely insights into the impact of recent economic fluctuations on the home improvement market. Results vary between the construction and architectural and design services sectors, with the latter reporting increased business activity last quarter and optimism through the end of the year. By contrast, more construction professionals reported a decline in business activity in the third quarter than an improvement, leading to a somewhat unfavorable outlook for the fourth quarter.

“After improving business activity in the third quarter, architecture and design professionals are relatively optimistic about business until the end of the year,” said Marin Sargsyan, an economist on the Houzz team. “However, as business activity in the construction sector continues to slow, construction professionals in particular have a more negative view on the quarter. Despite this outlook, activity continues and backlogs remain at least one week longer than they were in Last year for the construction sector.

Backlog in the construction sector was 11.4 weeks, up 0.9 weeks compared to the same period last year (10.5 weeks). Wait times as high as 15.1 weeks have been reported by construction professionals in the West North Central region. By contrast, companies in the architectural and design services sector recorded much shorter waiting times (6.1 weeks), down on last year (7.6 weeks).

Architectural and design services sector benchmark for the fourth quarter of 2023

Positive sentiment among the architectural and design services sector was much stronger in the fourth quarter (at 61) compared to the previous quarter (52). More companies expect business activity to improve compared to those that expect a slowdown. Both interior designers and architects reported improved business activity in the third quarter, although interior designers (64) are somewhat more optimistic than architects (59) that business growth will continue.

  • The Expected Business Activity Index related to project inquiries and committed new projects rose to 61 for the fourth quarter (up 9 points from the third quarter). The increase in the overall index was mainly due to a 9-point increase in forecasts for both project inquiries and new projects committed to 61, each in the fourth quarter.
  • The project backlog is 6.1 weeks at the beginning of the fourth quarter. Backlog is down a week and a half compared to last year (7.6 weeks), but is a week longer than it was five years ago in Q4 2018 (5.1 weeks).
  • The latest business activity index relating to business inquiries and new projects rose significantly to 52 in the third quarter (compared to 43 in the second quarter), with interior designers at 55 versus architects at 51, indicating that the number of businesses that saw improvements in activity trading is greater than those who reported deceleration for both groups. After a continuous decline over eight consecutive quarters, the general index rose for the second consecutive quarter to 52 in the third quarter. Recent project inquiries rose significantly to 50 and new committed projects increased to 55 in Q3 (up 10 and 9 points respectively compared to Q2).

Construction sector measure for the fourth quarter of 2023

The overall outlook among companies for the construction sector is unfavorable; However, expectations vary between design-build firms and remodeling-only firms. Design and construction companies appear more optimistic, with the business index expected to reach 53 points, meaning that slightly more companies expect growth rather than decline. Remodelers only expect slower activity than the previous quarter (41 in Q4 compared to 54 in Q3).

  • The Expected Business Activity Index related to project inquiries and committed new projects fell to 47 for the fourth quarter (compared to 54 in the third quarter), indicating that more companies expect decreases on a quarterly basis than increases on a quarterly basis. Expectations for project inquiries fell to 46, compared to 54 in the third quarter, and new projects committed reached 47, down 6 points compared to expectations for the third quarter (53).
  • The project backlog is 11.4 weeks at the start of the fourth quarter, which is 0.9 weeks longer than a year ago and 5.1 weeks longer than it was five years ago in the fourth quarter of 2018.
  • The latest business activity index for project inquiries and committed new projects reached 44 points in the third quarter, up one point from the second quarter. This is due to a 4-point increase in project inquiries in Q3, compared to the previous quarter and a 3-point decrease in new projects committed to 44 in Q3.

Regional accumulations

For the construction sector, the West and North Central division (including Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota) has the longest backlog (15.1 weeks) driven by wait times reported by builders only and construction design. in the region (18.3 and 12 weeks, respectively). Businesses in the East and South Central division (including Alabama, Kentucky, Mississippi, and Tennessee) reported a 5-week backlog before they could start a new project, the shortest wait time reported by construction companies among the nine census divisions. Compared to the same quarter last year, construction backlogs are longer across five of the nine Census divisions (in all East North Central, East South Central, Mid-Atlantic, and West South Central divisions).

Backlog also varies across all regional divisions between companies in the architectural and design services sector. Companies in the Mid-Atlantic Division (New York, New Jersey, Pennsylvania, Delaware, Virginia, and Maryland, plus the District of Columbia) reported a backlog of 8.3 weeks, while the West and South Central Division (including Arkansas, Louisiana, Oklahoma, and Texas) showed a much shorter backlog at 4.4 weeks. . The backlog reported by architects in the Mid-Atlantic division (10.2 weeks) is the driving force for the long wait times, while the wait to start a new project with an interior designer in that region is just 5.1 weeks. Compared to the same quarter last year, the architectural and design services sector’s backlog is longer across only two of the nine Census divisions (Mid-Atlantic and South Atlantic divisions).

Notes to editors

The Houzz Renovation Barometer is based on a quarterly online survey sent to a national panel of businesses with an online profile on Houzz. The Barometer tracks home renovation market conditions through three distinct indicators that track expected, current and recent business activity in two related industry sectors: the construction sector and the architectural and design services sector.

The Expected Business Activity Index is based on survey questions asking businesses to report whether they expect the number of business activities Project inquiries And New committed projects To increase, decrease, or remain unchanged in the next quarter compared to the previous quarter. Scores for each component are then calculated as seasonally adjusted diffusion indices on a scale from 0 to 100, where index values ​​greater than 50 indicate that a greater proportion of companies reported quarterly increases than those reporting decreases.

The latest business activity index is based on survey questions asking businesses to report whether they have observed the actual number of business activity Project inquiries And New committed projects Increase, decrease, or remain unchanged in the last quarter compared to the previous quarter. Scores for each component are then calculated as seasonally adjusted diffusion indices similar to the expected business activity index. Recent business activity index scores can be compared with projected business activity index scores for any given quarter to see whether actual activity has met, exceeded, or fallen short of expectations.

Finally, the Backlog Index is based on survey questions asking companies to report wait times in the weeks before a company can begin work on a new medium-sized project. Results are calculated as average waiting times without seasonal adjustment.

The three indices are calculated individually for two subsectors in the construction sector (Build-Only Remodelers and Design-Build Remodelers) and for two subsectors in the architectural and design services sector (Architects and Interior Designers), as well as for nine regions that fall within U.S. Census Bureau divisions. Aggregated national indices are calculated using industry subsector weights and regional weights derived from the 2016 U.S. Census County Business Patterns Survey. Detailed methodology, underlying quarterly indicators for the Construction Sector and Architectural and Design Services Sector, and other information on market conditions, can be found on houzz. com/research.

The Q4 2023 measure was submitted from September 30 to October 12, 2023, and received responses from more than 1,000 home improvement companies on Houzz. n=1060.


About Houzz

Houzz is the leading home remodeling and design platform, providing a comprehensive software solution for industry professionals and tools for homeowners to update their homes from start to finish. With Houzz, people can find ideas and inspiration, hire professionals, and shop products. Who’s Pro (houzz.com/pro) provides home industry professionals with a business management and marketing SaaS solution that helps them win projects, collaborate with clients and teams, and run their businesses efficiently and profitably. The Houzz community is made up of millions of homeowners, home design enthusiasts, and home improvement professionals around the world. Houzz is available on the web and as a highly-rated mobile app. For more information visit houzz.com. Houzz is a registered trademark of Houzz Inc. all over the world.

(tags for translation) expectations

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