Home professionals have strong expectations for the renovation market in the fourth quarter, according to the Q4 2019 Houzz Renovation Barometer. The barometer tracks residential market expectations, project backlogs, and recent activity among businesses in the construction sector.
Following a dip in professional confidence in the third quarter as a result of near-record levels of rainfall, skilled labor shortages, and uncertainty surrounding tariffs, confidence rebounded, increasing four points in Q4 relative to the third quarter, according to Houzz. Despite a recovery in confidence, project backlogs for the construction and architectural and design sectors are significantly below year-over-year levels, suggesting renovation activity in the last three months was not strong enough to overcome the lackluster first half of the year, Houzz finds. Rising product costs and economic uncertainty are contributing to project delays and a shift toward smaller project schedules for professionals.
“It is promising that expectations in the construction sector bounced back up from some of the lowest that we’ve seen last quarter. The architectural and design sector outlook also remains strong despite a mild quarter-over-quarter dip,” said Houzz principal economist Nino Sitchinava.
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 increased four points relative to the third quarter, boosted by increases in expectations for project inquiries. The Project Backlog Indicator increased 0.3 weeks to 5.2 weeks in Q4, though wait times are 1.1 weeks shorter than a year ago. The Recent Business Activity Indicator for the construction sector related to project inquiries and new committed projects increased five points from the previous quarter.
For architects and designers, the Expected Business Activity Indicator decreased four points compared to the third quarter, driven by lower expectations for both project inquiries and new committed projects. The wait times measured by the Project Backlog Indicator decreased by 0.6 weeks and stand at a full week shorter than a year ago. The Recent Business Activity Indicator for the sector decreased six points relative to the previous quarter.
The Q4 2019 Houzz Renovation Barometer compiled answers from 2,006 Houzz professional users. The indices are reported on a national level but 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.
