Industry Research
Pros Expect an End-of-Year Rebound Following Slowed Activity
Across the industry, optimism grew despite a third-quarter slowdown, according to the Q4 2024 Houzz Renovation Barometer
Home remodeling and design professionals are optimistic as the year draws to a close, with more firms anticipating an increase in business activity than a decrease in the final quarter of 2024. This follows an overall decline in business activity in the third quarter of the year. Meanwhile, wait times in the industry are similar to last year’s and hovering around historic averages.
Those are key findings in the just-released Q4 2024 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.
“Business activity slowed in Q3, especially in the construction sector, with fewer project inquiries and commitments compared with Q2,” Houzz staff economist Marine Sargsyan says. “However, the outlook for Q4 is more positive, especially among architectural and design firms, driven by anticipated economic growth, declining interest rates and larger project budgets. Those anticipating gains cite these favorable conditions, while others remain cautious due to economic uncertainty, current interest rates and tighter budgets. The broader political environment, including uncertainty around upcoming elections, also adds to the industry’s caution.”
Those are key findings in the just-released Q4 2024 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.
“Business activity slowed in Q3, especially in the construction sector, with fewer project inquiries and commitments compared with Q2,” Houzz staff economist Marine Sargsyan says. “However, the outlook for Q4 is more positive, especially among architectural and design firms, driven by anticipated economic growth, declining interest rates and larger project budgets. Those anticipating gains cite these favorable conditions, while others remain cautious due to economic uncertainty, current interest rates and tighter budgets. The broader political environment, including uncertainty around upcoming elections, also adds to the industry’s caution.”
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 by 10 points, to 62, for the fourth quarter of 2024, from 52 for the third quarter of 2024. This means more construction firms anticipate quarter-over-quarter growth than anticipate a decline.
Expectations for project inquiries increased by 7 points, to 59 (from 52 for Q3), and expectations for new committed projects increased by 12 points, to 64 (from 52 for Q3).
Both build-only and design-build firms are more optimistic for Q4 than they were for the previous quarter. The expected activity indicator for build-only firms increased 9 points, to 62 (from 53 for Q3), and for design-build firms it increased 10 points, to 61 (from 51 for Q3).
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 by 10 points, to 62, for the fourth quarter of 2024, from 52 for the third quarter of 2024. This means more construction firms anticipate quarter-over-quarter growth than anticipate a decline.
Expectations for project inquiries increased by 7 points, to 59 (from 52 for Q3), and expectations for new committed projects increased by 12 points, to 64 (from 52 for Q3).
Both build-only and design-build firms are more optimistic for Q4 than they were for the previous quarter. The expected activity indicator for build-only firms increased 9 points, to 62 (from 53 for Q3), and for design-build firms it increased 10 points, to 61 (from 51 for Q3).
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 slightly shorter they were a year ago. At the start of Q4 2024, the average backlog across the construction sector was 10.5 weeks nationally. That’s shorter by 0.9 weeks from Q4 2023, when it was 11.4 weeks.
Looking at it by reporting group, the average wait times are 8.3 weeks for build-only firms (2.3 weeks shorter than a year ago, when it was 10.6 weeks) and 12.8 weeks for design-build firms (1.3 weeks longer than a year ago, when it was 11.5 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 a seasonal adjustment.
Looking at it by reporting group, the average wait times are 8.3 weeks for build-only firms (2.3 weeks shorter than a year ago, when it was 10.6 weeks) and 12.8 weeks for design-build firms (1.3 weeks longer than a year ago, when it was 11.5 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 a seasonal adjustment.
Geographically, backlogs for the construction sector vary significantly, from 3.4 weeks in the East South Central division (Alabama, Tennessee, Kentucky and Mississippi) to 14.3 weeks in the West North Central division (Missouri, South Dakota, North Dakota, Iowa, Minnesota, Kansas and Nebraska).
A score lower than 50 indicates that more firms reported a decrease in their recent business activity than reported an increase.
3. Recent business activity decreased. The Recent Business Activity Indicator, which is related to project inquiries and new committed projects, decreased by 5 points, to 47, for the construction sector in Q3 2024 (from 52 in Q2), dropping back below the 50-point line. This was driven by a 6-point decrease in project inquiries, to 46 (from 52 in Q2) and a 4-point decrease in new committed projects, to 48 (from 52 in Q2).
Design-build remodelers reported a 3-point decline in recent business activity in Q3, to 48 (from 51 in Q2). Build-only remodelers saw a larger dip, to 46 (from 53 in Q2).
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 decreased. The Recent Business Activity Indicator, which is related to project inquiries and new committed projects, decreased by 5 points, to 47, for the construction sector in Q3 2024 (from 52 in Q2), dropping back below the 50-point line. This was driven by a 6-point decrease in project inquiries, to 46 (from 52 in Q2) and a 4-point decrease in new committed projects, to 48 (from 52 in Q2).
Design-build remodelers reported a 3-point decline in recent business activity in Q3, to 48 (from 51 in Q2). Build-only remodelers saw a larger dip, to 46 (from 53 in Q2).
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 increased. In the architectural and design services sector, the Expected Business Activity Indicator increased by 11 points, to 71 (from 60 for Q3). This was driven by a 13-point increase in expectations for project inquiries and a 9-point increase in expectations for committed projects.
Taking a closer look, architects and interior designers both reported increased expectations for Q4. Architects are especially optimistic, reporting a 17-point increase in expectations, to 77, for Q4 (from 60 for Q3). Interior designers are more cautiously optimistic, reporting a 1-point increase, to 61, for Q4 (from 60 for Q3).
Architectural and Design Firms
1. Business activity expectations increased. In the architectural and design services sector, the Expected Business Activity Indicator increased by 11 points, to 71 (from 60 for Q3). This was driven by a 13-point increase in expectations for project inquiries and a 9-point increase in expectations for committed projects.
Taking a closer look, architects and interior designers both reported increased expectations for Q4. Architects are especially optimistic, reporting a 17-point increase in expectations, to 77, for Q4 (from 60 for Q3). Interior designers are more cautiously optimistic, reporting a 1-point increase, to 61, for Q4 (from 60 for Q3).
2. Project backlogs are slightly higher than a year ago. Architectural and design service firms have seen a slight increase in wait times. The Project Backlog Indicator was 6.3 weeks at the beginning of Q4 — 0.2 weeks longer than a year ago, when it was 6.1 weeks.
The year-over-year increase was driven by architects, whose average backlog is 7.8 weeks, up by 0.4 weeks from Q4 2023. At 3.9 weeks in Q4 2024, interior designers’ average wait time is 0.2 weeks shorter than a year ago, when it was 4.1 weeks.
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The year-over-year increase was driven by architects, whose average backlog is 7.8 weeks, up by 0.4 weeks from Q4 2023. At 3.9 weeks in Q4 2024, interior designers’ average wait time is 0.2 weeks shorter than a year ago, when it was 4.1 weeks.
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Backlogs in the architectural and design services sector vary widely geographically.
Businesses in the West South Central division (Oklahoma, Texas, Arkansas and Louisiana) reported the shortest average backlog, at 4.4 weeks. The Middle Atlantic (New Jersey, New York and Pennsylvania) reported the longest backlog, at 9.9 weeks.
Businesses in the West South Central division (Oklahoma, Texas, Arkansas and Louisiana) reported the shortest average backlog, at 4.4 weeks. The Middle Atlantic (New Jersey, New York and Pennsylvania) reported the longest backlog, at 9.9 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 decreased but remained positive. The overall Recent Business Activity Indicator related to project inquiries and new committed projects for the architectural and design services sector remained above the 50-point line but decreased by 6 points, to 54, in Q3 versus 60 in Q2. This is attributed to an 8-point dip in recent project inquiries, to 52 (from 60 in Q2), and a 5-point decrease in new committed projects, to 55 (from 60 in Q2).
The Recent Business Activity Indicator remained at 60 for architects in Q3. It decreased significantly for interior designers, however, dipping 17 points, to 43, and going below the 50-point line. That means more interior designers experienced a slowdown in activity than experienced an improvement.
3. Recent business activity decreased but remained positive. The overall Recent Business Activity Indicator related to project inquiries and new committed projects for the architectural and design services sector remained above the 50-point line but decreased by 6 points, to 54, in Q3 versus 60 in Q2. This is attributed to an 8-point dip in recent project inquiries, to 52 (from 60 in Q2), and a 5-point decrease in new committed projects, to 55 (from 60 in Q2).
The Recent Business Activity Indicator remained at 60 for architects in Q3. It decreased significantly for interior designers, however, dipping 17 points, to 43, and going below the 50-point line. That means more interior designers experienced a slowdown in activity than experienced an improvement.
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 subsector and regional data).
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Read more on this and past Barometer reports (including more detailed subsector and regional 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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