Architects and Designers Expect Increased Activity in Q4 2024

Every quarter, we share insights from the Houzz Renovation Barometer to help you stay abreast of industry trends and make better business decisions. The Barometer provides insights on business expectations, project backlogs and recent activity among businesses in the U.S. construction and architectural and design services sectors, related to residential projects. Here are the findings for the fourth quarter of 2024, including data based on Q3 2024 results, specifically for interior designers and architects.

Business Activity Has Slowed…

The Recent Business Activity Indicator tracks project inquiries and new committed projects; a score over 50 means that more businesses saw a quarter-over-quarter increase in business activity than saw a decrease. In Q3 2024, the indicator decreased to 54 (versus 60 in Q2), driven by a dip in project inquiries (down 8 points, from 60 in Q2 to 52 in Q3) and new committed projects (down 5 points, from 60 in Q2 to 55 in Q3). Despite the decrease, the overall indicator is still higher than 50 points. 

Breaking it down by subsector, the indicator remained steady at 60 for architects in Q3. However, it dropped by 17 points for interior designers, to reach 43. As that score is below 50, it suggests that more interior designers in Q3 saw a decline in their business activity than saw an increase. 

…But Outlook Has Improved

The Expected Business Activity Indicator, which tracks optimism about future project inquiries and new committed projects, is once again above 50 for the architectural and design services sector. (A score above 50 indicates that more businesses expect a quarter-over-quarter increase in business activity than expect a decrease.) Moreover, the indicator rose by 11 points (71 for Q4 2024 versus 60 for Q3), meaning more pros are optimistic about Q4 than were optimistic about Q3.

“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,” Houzz staff economist Marine Sargsyan says. 

For the sector as a whole, here’s the percentage breakdown of the reasons for that positive outlook:

• Declining interest rates: 57%
• Economic growth: 47%
• Clients with bigger budgets: 47%

This rise in optimism is driven by a 13-point increase in expectations for project inquiries (73 in Q4 versus 60 in Q3) and a 9-point increase in committed projects (69 in Q4 versus 60 in Q3). 

Architects are especially optimistic about business activity, with a 17-point increase in expectations for Q4. However, the indicator for interior designers rose by only 1 point. Some pros are “cautious due to economic uncertainty, current interest rates and tighter budgets,” Sargsyan says. This variation can be attributed to various factors, such as local economic conditions.

Here’s the percentage breakdown among those with a less-than-positive outlook:

• Economic uncertainty: 79%
• Clients with budget constraints: 51%
• Interest rates: 38%

Wait Times Return to Normal

The overall Project Backlog Indicator for this sector was 6.3 weeks at the start of Q4. That’s up by 0.2 weeks compared with Q4 2023, when it was 6.1 weeks. This slight year-over-year increase is driven by architects, who report having a wait time of 7.8 weeks (up by 0.4 weeks from Q4 2023). But that was balanced by a 0.2-week decrease in wait times for interior designers (3.9 weeks in Q4 2024 versus 4.1 weeks in Q4 2023).

Average wait times are now hovering around historic norms.

A detailed methodology, underlying quarterly indices and other information on market conditions can be found in the full report. The Q4 2024 Barometer was fielded from Sept. 26 through Oct. 9, 2024, and garnered responses from 240 architects and 361 interior designers on Houzz (n=601 in the architectural and design services sector).

See more findings from the Q4 2024 Houzz Renovation Barometer

Find additional subsector and regional data for Q4 2024 here