Industry Research
Home Professionals Are Optimistic After a Strong Finish to 2024
Business activity and expectations increased across the industry, the Q1 2025 Houzz Renovation Barometer shows
Construction and design professionals kicked off 2025 feeling bullish, with more companies in both industry groups anticipating increases rather than decreases in first-quarter business activity. That optimism follows improved Q4 2024 business activity compared with Q3. Meanwhile, year-over-year, average wait times are slightly shorter among construction firms and longer among architecture and design firms.
Those are key findings in the just-released Q1 2025 Houzz Renovation Barometer, which provides timely insights into the residential renovation industry, including expectations, project backlogs and recent activity among businesses in the construction sector and the architectural and design services sector.
“Strong Q4 performance and recent federal interest rate cuts have bolstered confidence among industry professionals as we enter the new year,” Houzz staff economist Marine Sargsyan says. “With this solid foundation, construction firms are expressing the most positive sentiment we’ve seen for the sector in 2½ years. Confidence levels also remain high among architects and interior designers as new committed projects continue to reinforce demand expectations, though optimism among this sector has softened slightly.”
Those are key findings in the just-released Q1 2025 Houzz Renovation Barometer, which provides timely insights into the residential renovation industry, including expectations, project backlogs and recent activity among businesses in the construction sector and the architectural and design services sector.
“Strong Q4 performance and recent federal interest rate cuts have bolstered confidence among industry professionals as we enter the new year,” Houzz staff economist Marine Sargsyan says. “With this solid foundation, construction firms are expressing the most positive sentiment we’ve seen for the sector in 2½ years. Confidence levels also remain high among architects and interior designers as new committed projects continue to reinforce demand expectations, though optimism among this sector has softened slightly.”
A score higher than 50 indicates that more firms reported an increase in their business expectations than reported a decrease.
Construction Firms
1. Business activity outlook increased. The Expected Business Activity Indicator, related to project inquiries and new committed projects, increased 3 points, to 65, for the first quarter of 2025, from 62 for Q4 2024. This means more construction firms anticipate quarter-over-quarter growth than anticipate a decline.
Expectations for project inquiries increased 10 points, to 69 (from 59 for Q4), and expectations for new committed projects declined 2 points, to 62 (from 64 for Q4).
Both build-only and design-build firms are more optimistic for Q1 than they were for the previous quarter. The expected activity indicator for build-only firms increased 3 points, to 65 (from 62 for Q4), and for design-build firms it increased 5 points, to 66 (from 61 for Q4).
The indicator is based on survey questions about whether businesses expect the number of project inquiries and new projects to increase, decrease or remain unchanged in the coming three months compared with the previous three months.
Construction Firms
1. Business activity outlook increased. The Expected Business Activity Indicator, related to project inquiries and new committed projects, increased 3 points, to 65, for the first quarter of 2025, from 62 for Q4 2024. This means more construction firms anticipate quarter-over-quarter growth than anticipate a decline.
Expectations for project inquiries increased 10 points, to 69 (from 59 for Q4), and expectations for new committed projects declined 2 points, to 62 (from 64 for Q4).
Both build-only and design-build firms are more optimistic for Q1 than they were for the previous quarter. The expected activity indicator for build-only firms increased 3 points, to 65 (from 62 for Q4), and for design-build firms it increased 5 points, to 66 (from 61 for Q4).
The indicator is based on survey questions about whether businesses expect the number of project inquiries and new projects to increase, decrease or remain unchanged in the coming three months compared with the previous three months.
2. Project backlogs are shorter than they were a year ago. At the start of Q1 2025, the average backlog across the construction sector was 5.8 weeks nationally. That’s down 0.9 weeks from Q1 2024, when it was 6.7 weeks.
Looking at it by reporting group, the average wait times are 5 weeks for build-only firms (1.4 weeks shorter than a year ago, when it was 6.4 weeks) and 6.7 weeks for design-build firms (0.4 weeks shorter than a year ago, when it was 7.1 weeks).
The Project Backlog Indicator is based on survey questions that ask businesses to report wait times (in weeks) to start work on a midsize project. Scores are computed as average wait times without seasonal adjustment.
Looking at it by reporting group, the average wait times are 5 weeks for build-only firms (1.4 weeks shorter than a year ago, when it was 6.4 weeks) and 6.7 weeks for design-build firms (0.4 weeks shorter than a year ago, when it was 7.1 weeks).
The Project Backlog Indicator is based on survey questions that ask businesses to report wait times (in weeks) to start work on a midsize project. Scores are computed as average wait times without seasonal adjustment.
Geographically, backlogs for the construction sector vary significantly, from 9.1 weeks in the New England division (Maine, Massachusetts, Connecticut, New Hampshire, Rhode Island and Vermont) to 4.1 weeks in both the Mountain division (Arizona, New Mexico, Wyoming, Nevada, Colorado, Utah, Idaho and Montana) and the South Atlantic division (Delaware, Georgia, Florida, South Carolina, Maryland, North Carolina, West Virginia, District of Columbia and Virginia).
A score higher than 50 indicates that more firms reported an increase in their recent business activity than reported a decrease.
3. Recent business activity increased. The Recent Business Activity Indicator, which is related to project inquiries and new committed projects, increased 7 points, to 54, for the construction sector in Q4 2024 (from 47 in Q3), climbing above the 50-point line. This was driven by a significant 14-point increase in project inquiries, to 60 (from 46 in Q3), and stable new committed projects (48).
Design-build remodelers reported a 7-point increase in recent business activity in Q4, to 55 (from 48 in Q3). Build-only remodelers also saw a 7-point increase, to 53 (from 46 in Q3).
The Recent Business Activity Indicator looks at actual activity over the previous three months. In contrast with the Expected Business Activity and Project Backlog indicators, which look forward in time, the Recent Business Activity Indicator looks back. It’s based on survey questions about whether businesses observed an increase, a decrease or no change in the actual number of project inquiries and new committed projects over the previous three months relative to the three months prior.
3. Recent business activity increased. The Recent Business Activity Indicator, which is related to project inquiries and new committed projects, increased 7 points, to 54, for the construction sector in Q4 2024 (from 47 in Q3), climbing above the 50-point line. This was driven by a significant 14-point increase in project inquiries, to 60 (from 46 in Q3), and stable new committed projects (48).
Design-build remodelers reported a 7-point increase in recent business activity in Q4, to 55 (from 48 in Q3). Build-only remodelers also saw a 7-point increase, to 53 (from 46 in Q3).
The Recent Business Activity Indicator looks at actual activity over the previous three months. In contrast with the Expected Business Activity and Project Backlog indicators, which look forward in time, the Recent Business Activity Indicator looks back. It’s based on survey questions about whether businesses observed an increase, a decrease or no change in the actual number of project inquiries and new committed projects over the previous three months relative to the three months prior.
A score higher than 50 indicates that more firms reported an increase in their business expectations than reported a decrease.
Architectural and Design Firms
1. Business activity expectations decreased. In the architectural and design services sector, the Expected Business Activity Indicator remained above the 50-point line in Q1 2025, but it decreased 3 points, to 68 (from 71 for Q4 2024). This was driven by a 7-point decrease in expectations for project inquiries, to 66 (from 73 for Q4), and stable expectations for committed projects (69).
Taking a closer look, architects and interior designers reported differing expectations for Q1. Architects are cautious, reporting a 12-point decrease in expectations, to 65, for Q1 (from 77 for Q4). Interior designers are more optimistic, reporting an 11-point increase, to 72, for Q1 (from 61 for Q4).
Architectural and Design Firms
1. Business activity expectations decreased. In the architectural and design services sector, the Expected Business Activity Indicator remained above the 50-point line in Q1 2025, but it decreased 3 points, to 68 (from 71 for Q4 2024). This was driven by a 7-point decrease in expectations for project inquiries, to 66 (from 73 for Q4), and stable expectations for committed projects (69).
Taking a closer look, architects and interior designers reported differing expectations for Q1. Architects are cautious, reporting a 12-point decrease in expectations, to 65, for Q1 (from 77 for Q4). Interior designers are more optimistic, reporting an 11-point increase, to 72, for Q1 (from 61 for Q4).
2. Project backlogs are longer than they were a year ago. Architectural and design service firms have seen an increase in wait times. The Project Backlog Indicator was 7.3 weeks at the beginning of Q1 — 2.1 weeks longer than a year ago, when it was 5.2 weeks.
The year-over-year increase was driven by architects, whose average backlog is 8.8 weeks, up 2.7 weeks from Q1 2024, when it was 6.1 weeks. At 4.6 weeks in Q1 2025, interior designers’ average wait time is 1 week longer than a year ago, when it was 3.6 weeks.
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The year-over-year increase was driven by architects, whose average backlog is 8.8 weeks, up 2.7 weeks from Q1 2024, when it was 6.1 weeks. At 4.6 weeks in Q1 2025, interior designers’ average wait time is 1 week longer than a year ago, when it was 3.6 weeks.
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Backlogs in the architectural and design services sector also vary widely by region.
Businesses in the West North Central division (Missouri, South Dakota, North Dakota, Iowa, Minnesota, Kansas and Nebraska) reported the shortest average backlog, at 3.1 weeks. The East South Central division (Alabama, Tennessee, Kentucky and Mississippi) reported the longest backlog, at 8.4 weeks.
Businesses in the West North Central division (Missouri, South Dakota, North Dakota, Iowa, Minnesota, Kansas and Nebraska) reported the shortest average backlog, at 3.1 weeks. The East South Central division (Alabama, Tennessee, Kentucky and Mississippi) reported the longest backlog, at 8.4 weeks.
A score higher than 50 indicates that more firms reported an increase in their recent business activity than reported a decrease.
3. Recent business activity increased. The overall Recent Business Activity Indicator related to project inquiries and new committed projects for the architectural and design services sector increased 4 points, to 58, in Q4 2024, from 54 in Q3. This is attributed to a 4-point increase in recent project inquiries, to 56 (from 52 in Q3), and a 4-point increase in new committed projects, to 59 (from 55 in Q3).
The Recent Business Activity Indicator is up 1 point, to 61, for architects in Q4. For interior designers, however, it jumped 10 points, to 53, climbing above the 50-point line. That means more interior designers experienced an increase in activity than experienced a decrease.
3. Recent business activity increased. The overall Recent Business Activity Indicator related to project inquiries and new committed projects for the architectural and design services sector increased 4 points, to 58, in Q4 2024, from 54 in Q3. This is attributed to a 4-point increase in recent project inquiries, to 56 (from 52 in Q3), and a 4-point increase in new committed projects, to 59 (from 55 in Q3).
The Recent Business Activity Indicator is up 1 point, to 61, for architects in Q4. For interior designers, however, it jumped 10 points, to 53, climbing above the 50-point line. That means more interior designers experienced an increase in activity than experienced a decrease.
The Houzz Renovation Barometer is based on a quarterly online survey sent to a national panel of U.S. businesses with online profiles on Houzz. If you’re a pro and would like to offer your insights on market conditions in your area by joining the Barometer panel, please click here.
Read more on this and past Barometer reports (including more detailed regional and subsector data).
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Read more on this and past Barometer reports (including more detailed regional and subsector data).
Tell us: How does this report compare with your experiences? Please share in the Comments.
More for Pros on Houzz
Read more stories for pros
Learn about Houzz Pro software
Talk with your peers in pro-to-pro discussions
Join the Houzz Trade Program
Here’s what remodeling and design industry professionals are saying about current residential renovation market conditions.
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