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Houzz Inc., the leading platform for home remodeling and design, today released the Q4 2020 Houzz Renovation Barometer, which 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. The Houzz Barometer shows that businesses have recovered to pre-pandemic activity levels. In fact, the construction sector is reporting its strongest business activity since Q3 2018.

“The results from the Houzz Q4 Barometer show that the home remodeling and design industry is truly resilient, and is seeing business activity return to pre-pandemic levels,” said Marine Sargsyan, Houzz senior economist. “Home professionals have a positive outlook through the end of the year, despite unprecedented uncertainty due to the pandemic and the upcoming election, increasing supply chain constraints as well as shortages in the labor market. Pros are taking on new clients remotely using online tools and collaboration platforms, continuing the momentum from the recent quarter.”

Q4 2020 Construction Sector Barometer
- The Recent Business Activity Indicator related to project inquiries and new committed projects increased substantially to 75 in Q3 (compared to 49 in Q2). This is driven by an increase in project inquiries, which grew to 75 in Q3 (up 24 points relative to Q2), and by an increase in new committed projects to 75 (up 19 points relative to Q2).
- The Project Backlog Indicator increased to 7.2 weeks in Q4 relative to Q3, which is two weeks longer than a year ago.
- The Expected Business Activity Indicator related to project inquiries and new committed projects remained high, though it decreased slightly to 73 in Q4 (compared to 75 in Q3). Expectations for project inquiries are down to 71 compared to 79 in Q3 and new committed projects increased to 75 (up four points relative to Q3).

Q4 2020 Architectural and Design Services Sector Barometer
- The Recent Business Activity Indicator related to project inquiries and new committed projects increased to 61 in Q3 (compared to 48 in Q2). This is driven by a growth in project inquiries to 60 (up seven points in Q3 relative to Q2), and an increase in new committed projects to 62 (up 19 points relative to Q2).
- The Project Backlog Indicator remained steady at 4.5 weeks in Q4, which is 0.4 weeks longer than a year ago.
- The Expected Business Activity Indicator related to project inquiries and new committed projects decreased to 62 in Q4 (compared to 67 in Q3). Expectations also decreased for project inquiries to 62 and for new committed projects to 61 in Q4. That said, the results show a greater proportion of firms reported quarter-over-quarter increases than those reporting decreases.

COVID-19’s Influence on Home Renovation and Design Businesses
Architecture and design firms responded to pandemic-related business challenges by offering video consultations, implementing safety guidelines at the office and worksite, providing remote collaboration tools and sourcing more products online (56, 49, 48 and 46 percent, respectively). Construction businesses implemented new safety guidelines, utilized video consultation tools and sourced more products online (60, 33 and 31 percent, respectively). One third of businesses in the architectural and design services sector and more than a quarter of businesses in the construction sector also adopted online invoicing and payments (36 and 26 percent, respectively). Many of these solutions are supported by Houzz Pro business and project management software.

Notes to Editors
The Houzz 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 home renovation market conditions via three distinct indices that track expected, current, and recent business activity in two related industry sectors, the construction sector and the architectural and design services sector.

The Expected Business Activity Indicator is based on survey questions that ask businesses to report whether they expect the number of project inquiries and new committed projects to increase, decrease or stay unchanged in the upcoming quarter relative to the prior quarter. Scores for each component are then computed as a seasonally adjusted diffusion indices on a scale of 0 to 100, with index values over 50 indicating that a greater proportion of firms reported quarter-over-quarter increases than those reporting decreases.

The Recent Business Activity Indicator is based on survey questions that ask businesses to report whether they observed the actual number of project inquiries and new committed projects increasing, decreasing or staying unchanged in the most recent quarter relative to the prior quarter. Scores for each component are then computed as a seasonally adjusted diffusion indices similar to the Expected Business Activity Indicator. Recent Business Activity Indicator scores can be compared to the Expected Business Activity Indicator scores for any given quarter to see whether actual activity met, exceeded, or fell short of expectations.

Finally, the Backlog Indicator is based on survey questions that ask businesses to report wait times in weeks before a company can start work on a new midsize project. Scores are computed as average wait times without a seasonal adjustment.

All three indices are computed individually for two subsectors in the construction sector (build only remodelers and design and build remodelers) and for two subsectors in the architectural and design services sector (architects and interior designers), as well as for nine regions that follow U.S. Census Bureau Divisions. The aggregated national indices are computed using industry subsector weights and regional weights derived from the 2016 U.S. Census County Business Patterns survey. Detailed methodology and underlying quarterly indices for the construction sector and the architectural and design services sector, and other information on market conditions can be found on houzz.com/research.

The Q4 2020 Barometer was fielded September 24th, 2020 through October 7th, 2020 and garnered responses from nearly 1,700 home improvement firms on Houzz. n=1,696.

About Houzz
Houzz is the leading platform for home renovation and design, providing people with everything they need to improve their homes from start to finish. On Houzz, people can find design inspiration, research and hire home professionals, and shop for products to complete their projects. For home professionals, Houzz Pro (houzz.com/pro) provides an all-in-one software solution that empowers industry pros to stand out, win clients and manage their projects efficiently and profitably. The Houzz community is made up of millions of homeowners, home design enthusiasts and home improvement professionals around the world. Houzz is available on the web and as a top-rated mobile app. Headquartered in Palo Alto, California, Houzz also has international offices in London, Berlin, Sydney, Moscow, Tel Aviv and Tokyo. Houzz is a registered trademark of Houzz Inc. worldwide. For more information, visit houzz.com.