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 two groups of construction professionals: design-build firms and build-only firms.
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 by 5 points, to 47 (from 52 in Q2). As that score is below 50, it suggests that more construction firms in Q3 saw a decline in their business activity than saw an increase compared with Q2.
The dip was driven by a 6-point decrease in project inquiries quarter over quarter (46 in Q3 versus 52 in Q2), and a 4-point decrease in new committed projects (18 in Q3 versus 52 in Q2).
Breaking it down by sub-sector, the Recent Business Activity Indicator is down by 3 points for design-build remodelers and down by 7 points for build-only remodelers. It now stands at 48 and 46, respectively.
“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 remains positive.”
…But Outlook Has Improved
The Expected Business Activity Indicator, which tracks sentiment about future project inquiries and new committed projects, increased by 10 points for the two groups combined between Q3 and Q4 2024, from 52 to 62. (A score above 50 indicates that more businesses expect a quarter-over-quarter increase in business activity than expect a decrease.) The expectations for project inquiries increased by 7 points, to 59, and for new committed projects by 12 points, to 64.
The Expected Business Activity Indicator has reached 62 for build-only firms and 61 for design-build firms, with both numbers being higher than in Q3.
This optimism is “driven by anticipated economic growth, declining interest rates and larger project budgets,” Sargsyan says. For the sector as a whole, here’s the percentage breakdown of the reasons for that positive outlook:
- Declining interest rates: 53%
- Clients with bigger budgets: 49%
- Economic growth: 34%
Here’s the percentage breakdown among those with a less-than-positive outlook:
- Economic uncertainty: 76%
- Budget constraints among clients: 54%
- Interest rates: 40%
Wait Times Vary by Subsector
The overall Project Backlog Indicator for the construction sector was 10.5 weeks nationally at the start of Q4 2024, which is 0.9 weeks shorter than a year ago. However, the average wait time varies by subsector. For build-only remodelers, it is 8.3 weeks, which is 2.3 weeks shorter compared with Q4 2023. Design-build remodelers, on the other hand, report longer wait times compared with Q4 2023 (0.6 weeks longer on average, to be exact, and the average wait time is now 12.8 weeks).
A detailed methodology, underlying quarterly indices and other information on market conditions can be found in the full report. The Q4 2024 U.S. Houzz Renovation Barometer was fielded from Sept. 26 through Oct. 9, 2024 and garnered responses from 118 build-only remodelers and 310 design-build remodelers (n=428 in the construction sector).
See more findings from the Q4 2024 Houzz Renovation Barometer
Find additional subsector and regional data for Q4 2024 here
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