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 second quarter of 2024 specifically for building and renovation pros.

Business Activity Decreases Again

For the seventh consecutive quarter, the Recent Business Activity Indicator, which is related to project inquiries and new committed projects, is below 50. A score below 50 indicates that more businesses saw a quarter-over-quarter decrease in business activity than saw a quarter-over-quarter increase. We provide the score from the previous completed quarter. For Q1 2024, for the construction sector as a whole—composed of design-build businesses and build-only professionals—the score is 45.

Not only is this number lower than in the previous six quarters, but it has not reached pre-pandemic levels, which were in the 60s and 70s. However, there are reasons to be optimistic for the future, as you’ll see below.

“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,” Houzz staff economist Marine Sargsyan says. However, “pros across sectors maintain a hopeful outlook for increased business activity in the coming months,” she adds. “This is reflective of resilient local economies and aligns with positive consumer sentiment nationally.” 

Build-Only Pros Saw Little Change in Activity

Interestingly, although the combined Recent Business Activity Indicator score for build-only pros and design-build pros is below 50, that score was influenced largely by low business activity reported by design-build pros. The overall indicator for the other group in the constructor sector as a whole, build-only pros, actually dropped only slightly in Q1 2024, from 53 to 50. Breaking it down, build-only pros saw a slight decline in project inquiries, with the score lowering from 52 in Q4 2023 to 49 in Q1 2024, and saw a slight decline in new committed projects, from 54 in Q3 2023 to 51 in Q1 2024.

However, it’s important to note that the overall Recent Business Activity Indicator of 50 for build-only pros means that the share of businesses that saw recent activity increase is the same as those who saw it decrease. 

Design-Build Pros See Greater Dips in Activity

Since a high Recent Business Activity score of 83 in Q2 2021, design-build pros have been seeing a downward trend in activity. For Q1 2024, the indicator stands at 40, meaning more businesses saw a quarter-over-quarter decrease in business activity than saw a quarter-over-quarter increase. Project inquiries are down by 4 points quarter over quarter (a score of 37 in Q1 2024 versus 41 in Q4 2023), and new projects are down by 2 points (a score of 44 in Q1 2024 versus 46 in Q4 2023). 

Project Backlogs Have Greatly Improved

For design-build pros, the number of weeks required to start a project reached a high of 16.8 back in Q2 2022, and while that backlog time has not dropped consistently over all the quarters since then, it has dropped greatly nonetheless, and in Q2 2024 stands at 6.2 weeks. Moreover, it is lower than in the previous year (Q2 2023), when it was 10.5 weeks.

Similarly, build-only pros saw a decrease in the time required to start a project year over year; it’s now 6.8 weeks in Q2 2024 versus 13.2 weeks in Q2 2023. 

Combining both sectors to look at the overall project backlog, we see a significant decrease in backlog time since the end of 2023. It was 11.9 weeks in Q2 2023 and is 6.5 weeks in Q2 2024, meaning a decrease in backlog time of more than a month (5.4 weeks).

Activity Improvements Expected

Since the end of 2022, the Expected Business indicator has been steadily rising except for one downward blip in Q4 2023. At the end of 2022, the indicator score was 50, and in Q2 2024 it stands at 58. A score over 50 means that more businesses expect an increase in business activity in the next three months, which refers to new project inquiries and new committed projects, than expect a decrease.

Moreover, both the build-only sector and the design-build sector have been for the most part expecting improvements in both categories (new project inquiries and new committed projects) for three consecutive quarters. In Q4 2023, the indicator for project inquiries was 41 for build-only pros and 52 for design-build pros, and in Q2 2024 it stands at 59 and 58, respectively. In Q4 2023, the indicator for new committed projects was 40 for build-only pros and 54 for design-build pros, and in Q2 2024 it stands at 56 and 58, respectively.

Interestingly, design-build firms have only slightly tempered their expectations for Q2 2024, despite their unmet expectations for Q1 performance. For Q2 2024, the Expected Business Activity Indicator is 58, whereas it was 59 in Q1. And as the indicator is still above 50, it means they continue to anticipate improvements in the next three months. 

A detailed methodology, underlying quarterly indices and other information on market conditions can be found here. The Q2 2024 Barometer was fielded March 15 through April 4, 2024, and garnered responses from over 1,000 home improvement firms (including construction pros as well as architects and designers) on Houzz. n=1,054.

See more findings from the Q2 2024 Houzz Renovation Barometer

Find additional subsector and regional data for Q2 2024 here