Project backlogs for design and construction companies have been increasing steadily since the beginning of the pandemic and are now reaching record highs, the Houzz Renovation Barometer has found. Here’s the most recent data for both backlogs and business activity across the United States, based on Houzz research.

Going into the fourth quarter of 2021, backlogs at architectural and design firms are at their longest in four years, since the barometer began tracking them; the average is now 9.3 weeks, up from 4.5 weeks year over year. In the construction sector, the average backlog time is 11.7 weeks, up from 7.2 weeks year over year.

“Many businesses are struggling to catch up with heightened demand as they navigate supply-chain challenges and labor availability,” said Houzz senior economist Marine Sargsyan. While the length of time varies by geographic region, backlogs are longer now than they were a year ago across all nine U.S. Census regions, for both the design and construction industries. In construction, backlogs range from 9.2 weeks for the Mountain division to 13.8 weeks for the New England division. The South Atlantic and West North Central divisions have experienced the largest increase — up 6 weeks — compared with Q4 2020.

In the architectural and design services sector, backlogs across all regional divisions vary from 6.1 weeks for the West North Central division to 11.1 weeks for the New England division. Compared with Q4 2020, they increased the most in New England, up 7.1 weeks, followed by the Middle Atlantic, up 6.2 weeks.

Shortages Affect Business Activity

A slowdown in the availability of products and materials is partly behind the slowdown in project completion. More than half of firms in both the construction and architectural and design services sectors report challenges with product and material shortages, as well as increased costs, as of the beginning of Q4 2021. It’s no surprise, then, that business activity was down in Q3 versus Q2. 

In construction, the Business Activity Indicator was 73 in Q3 2021, exactly where it stood in Q1 2021 and higher than the seven quarters preceding Q3 2020. (A score higher than 50 indicates that more firms reported increases in activity than decreases.) In fact, it’s pretty much in line with pre-pandemic levels.

For design and architecture firms, the indicator was 70 in Q3 2021, down just a few points from Q1 and Q2 and still higher than every quarter for the five years prior to Q1 2021. “We’ve seen some settling of home renovation and design activity following record high performance earlier in the year,” Sargsyan said. However, “confidence prevails across the industry through year-end despite the Expected Business Activity Indicator’s dipping slightly compared with the very high level last quarter.”

As product and material shortages become increasingly hard to navigate, pros are utilizing various tactics, such as buying materials when they’re available and stockpiling for the future. They’re also turning to resources such as the Houzz Trade Program, which has dedicated account reps to source products and stay in touch with manufacturers about availability.

Prices Change More Than Pros Expected

While only half of businesses anticipated higher costs for raw materials — such as lumber, copper, steel, plastic and aluminum — more than two-thirds reported that these materials did in fact see a price hike over the past quarter. Following a recent increase in the price of lumber, only 2 in 5 businesses expect that lumber pricing will continue to rise through the end of the year, but pros seem to be concerned about an increase in steel prices going into Q4.

Labor Still in Short Supply

With the media dubbing a major trend this year “The Great Resignation” due to unprecedented numbers of workers leaving their jobs, it’s no surprise that 9 in 10 construction businesses (91 percent) report moderate to severe skilled labor shortages going into Q4. While fewer pros report shortages across all job categories this quarter than in Q3, several types of tradespeople are still hard to find.

Carpenters, laborers, framers and cabinet specialists continue to be in the shortest supply (reported by 52%, 43%, 36% and 35% of businesses, respectively). The availability of cabinet specialists has been particularly impacted as well, with the percentage of pros reporting shortages of them increasing 14 percentage points since 2019 (35% now versus 21% then). Conversely, the percentage of pros reporting shortages of drywallers, plumbers, concrete specialists, flooring specialists and roofers decreased 6 or more percentage points since Q3.

Given the limited availability of tradespeople, it’s essential to schedule them well in advance of a project. Good planning, setting reasonable expectations with clients and staying on top of market changes — not just for labor but for materials and prices — can go a long way toward completing projects in a satisfactory manner and earning great reviews.