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14. oktober 2021
Confidence in the Home Renovation Industry Remains High Despite Record Delays, Houzz Barometer Finds
Uncertainty increases around labor and material shortages


Houzz Inc., the leading platform for home remodeling and design, today released the Q4 2021 Houzz Renovation Barometer. The report tracks residential renovation market expectations, project backlogs and recent activity among U.S businesses in the construction sector and the architectural and design services sector. The Houzz Barometer found that businesses anticipate strong activity through the end of the year. With steady increases in backlogs since the beginning of the pandemic, construction professionals in particular report wait times of nearly three months before new projects can begin.

“Confidence prevails across the industry through year-end despite the Expected Business Activity Indicator dipping slightly compared with the very high level last quarter,” said Marine Sargsyan, Houzz senior economist. “We’ve seen some settling of home renovation and design activity following record high performance earlier in the year. Yet many businesses are struggling to catch up with heightened demand as they navigate supply chain challenges and labor availability, leading to record-long backlogs.”

Q4 2021 Construction Sector Barometer
In the construction industry, build-only remodelers and design and build remodelers are aligned in their reporting of recent and anticipated business performance.
- The Expected Business Activity Indicator related to project inquiries and new committed projects decreased to 74 in Q4 (compared to 76 in Q3). Expectations for project inquiries declined to 73 compared to 79 in Q3, while new committed projects rose slightly to 74 (up one point relative to Q3).
- The Project Backlog Indicator increased to 11.7 weeks in Q4, which is more than a month longer than a year ago (7.2 weeks). Wait times are double those reported in Q4 2019 (5.2 weeks).
- The Recent Business Activity Indicator related to project inquiries and new committed projects dropped significantly to 73 in Q3 (compared to 82 in Q2). This is driven by a decline in project inquiries, which decreased substantially to 71 in Q3 (down 13 points relative to Q2), and by a decline in new committed projects to 75 (down six points relative to Q2). Despite this drop, the recent business activity is much stronger than it was two years ago (63 in Q3 2019).

Q4 2021 Architectural and Design Services Sector Barometer
Responses for recent and anticipated performance diverge somewhat among the two subsectors of architectural and design services. Architects have a positive outlook, anticipating an increase in project inquiries and new commited projects. Interior designers’ optimism about Q4 is tempered, reporting lower expectations than last quarter for project inquiries and new committed projects.
- The Expected Business Activity Indicator related to project inquiries and new committed projects decreased by one point to 69 in Q4 (compared to 70 in Q3). Expectations remained the same for project inquiries at 70 in Q4, and slightly declined for new committed projects to 68 in Q4 (compared to 70 in Q3).
- The Project Backlog Indicator reached 9.3 weeks in the beginning of Q4, which is more than a month longer than a year ago (4.5 weeks). Long wait times are driven by the highest reported backlogs by architectural firms (11.1 weeks in Q4) since the Houzz Barometer began tracking this information in July 2017.
- The Recent Business Activity Indicator related to project inquiries and new committed projects declined slightly to 70 in Q3 (compared to 72 in Q2), while significantly higher than business activity reported since 2016. Project inquiries remained steady at 74, while there is a decrease in new committed projects to 66 (down five points relative to Q2).

Costs and Shortages Impacting Home Renovation and Design
More than half of firms in both the construction and architectural and design services sectors report challenges with product and material shortages and increased costs as of the beginning of Q4.
- While only half of businesses anticipated heightened costs for raw materials, such as lumber, copper, steel, plastic and aluminum, more than two-thirds reported that these materials actually increased in cost over the past quarter. Following recent price hikes for lumber, only two in five businesses expect that costs will continue to rise through the end of the year. Alternatively, pros seem to be more concerned about the rise of steel prices going into Q4.
- More than nine in 10 construction businesses reported moderate to severe skilled labor shortages in Q4 (91 percent). While fewer pros reported shortages across all categories this quarter than in Q3, carpenters, laborers, framers and cabinet specialists continue to be in shortest supply (52, 43, 36 and 35 percent, respectively). Availability for cabinet specialists has been particularly impacted with an increase of 14 percentage points since 2019 (35 versus 21 percent, respectively). Conversely, shortages for drywallers, plumbers, concrete specialists, flooring specialists and roofers saw six or more percentage point decreases from Q3.

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 2021 Barometer was fielded September 28 through October 8th, 2021 and garnered responses from over 1,300 home improvement firms on Houzz. n=1,350.

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.