Confidence in Q3 Home Renovation Market Mixed Among Home Professionals, Houzz Barometer Finds

Window & Door
July 16, 2019
Markets

Near-record levels of rainfall, continued labor shortages and the impact of tariffs challenge construction business sentiment, according to Houzz Inc.'s Q3 2019 Houzz Renovation Barometer. The barometer tracks residential renovation market expectations, project backlogs and recent activity among businesses in the construction sector and the architectural and design services sector in the U.S. It points to mixed expectations for home renovation market activity in the third quarter of the year.

“The third quarter outlook for the architecture and design sector is the most optimistic of the past two years. However, construction sector sentiments are some of the lowest we’ve seen since 2015, although still high in absolute terms,” says Nino Sitchinava, Houzz principal economist. “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. 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.”

Construction Sector

  • The Expected Business Activity Indicator related to project inquiries and new committed projects decreased in Q3. The decrease is a result of a decline in expectations for both project inquiries and new committed projects.
  • The Project Backlog Indicator decreased to 4.3 weeks in Q3 relative to Q2 (5.0 weeks). Wait times are 2.2 weeks shorter than a year ago.
  • The Recent Business Activity Indicator related to project inquiries and new committed projects declined in Q2. This follows a decline in project inquiries in Q2, and a decrease in new committed projects compared to Q1.

Architectural and Design Services Sector

  • The Expected Business Activity Indicator related to project inquiries and new committed projects increased slightly in Q3. Expectations increased for project inquiries and remained steady for new committed projects.
  • The Project Backlog Indicator remained steady at 4.7 weeks in Q3 relative to Q2. Wait times are 0.9 weeks shorter than a year ago.
  • The Recent Business Activity Indicator related to project inquiries and new committed projects remained steady in Q2.