Home professionals have mixed expectations for the renovation market in the third quarter, according to the Q3 2019 Houzz Renovation Barometer. The Barometer tracks residential renovation market expectations, project backlogs, and recent activity among businesses in the construction sector.
While the third-quarter outlook for the architecture and design sector is the most optimistic it has been in the past two years, the construction sector sentiments are some of the lowest Houzz has seen since 2015.
"Weather was the leading concern among construction businesses in the second quarter, which is understandable, since it was the wettest quarter in the U.S. since 1957," Houzz principal economist Nino Sitchinava said. "Hitting a two-year low, average construction project backlogs also declined at the start of Q3, implying that households are reluctant to start construction this late in the year. While labor shortages are top of mind for construction and architecture businesses alike, a third of businesses report a negative impact from tariffs, with rising material costs eroding margins on existing contracts and causing unease among prospective customers."
The Renovation Barometer is based on a quarterly online survey sent to a national panel of businesses with an online profile on Houzz. The Barometer keeps a pulse on the market through its Expected Business Activity Index, Backlog Indicator Index, and Recent Business Activity Indicator Sector.
In the construction sector, the Expected Business Activity Index related to project inquiries and new committed projects decreased three points to 71 in Q3. The Project Backlog Indicator decreased to 4.3 weeks in Q3 and wait times are 2.2 weeks shorter than a year ago. The Recent Business Activity Indicator Index declined three points from previous quarter.
For architects and designers, the Expected Business Activity Index increased by one point relative to Q2. The wait times measured by the Project Backlog Indicator and project inquiries and new committed projects related to the Recent Business Activity Index both remained steady from the previous quarter. The wait times for architects and designers are still 0.9 week shorter than a year ago, according to Houzz.
The Q3 2019 Houzz Renovation Barometer compiled the answers from 2,622 Houzz users. The indices reported on a national level are also computed for the nine U.S. Census regions. The national indices are computed using industry subsector weights and regional weights derived from the 2016 U.S. Census Business Patterns survey.
