Virksomhedsnyheder

Houzz Inc., the leading platform for home remodeling and design, including the all-in-one software solution for industry professionals, today released the Q4 2022 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 United States. Fielded this quarter from September 27 through October 5, 2022, the Barometer provides timely insights into the impact of recent economic volatility on the home renovation market. Professionals across sectors report slower business activity in the third quarter of 2022 but diverge in their expectations for Q4. A majority of businesses in the architectural and design services sector anticipate continued growth in Q4, while a majority of those in the construction sector anticipate slowed Q4 activity.

“As economic conditions are not showing signs of easing, businesses in the construction and design services sectors are navigating with caution. Professionals across industry sectors report slower business activity in Q3 2022 compared with Q2, citing increased costs of labor, products and materials, shortages across all aspects of the business and customers’ concerns about costs,” said Marine Sargsyan, Houzz staff economist. “Construction sector professionals are neutral in their expectations for business activity through the end of the year. On the other hand, the majority of architects and interior designers anticipate increases in new committed projects in Q4.”

Q4 2022 Construction Sector Barometer
In the construction industry, build-only and design-build professionals diverge on anticipated business performance. Build-only remodelers anticipate declines in business activity in Q4, while more design-build firms expect increases than expect decreases in the same time frame. As project inquiries declined significantly in Q3 2022 among the two business groups, both have lowered their expectations for new committed projects in Q4 2022.

- The Expected Business Activity Indicator related to project inquiries and new committed projects decreased to 50 in Q4 (compared with 62 in Q3), which indicates that the same number of businesses expect quarter-over-quarter increases as quarter-over-quarter decreases. Expectations for project inquiries declined to 47, compared with 62 in Q3, and new committed projects reduced to 53, down 10 points relative to expectations in Q3 (63).
- The Project Backlog Indicator is 10.5 weeks in the beginning of Q4, which is 1.2 weeks shorter than a year ago, but more than double Q4 2019 backlogs.
- The Recent Business Activity Indicator related to project inquiries and new committed projects declined to 42 in Q3, down 21 points from Q2. This is driven by a 26 point decline in project inquiries in Q3, relative to the previous quarter, and by a 14 point decrease in new committed projects to 51 (65 points relative to Q2 2022).


Q4 2022 Architectural and Design Services Sector Barometer
Business performance expectations somewhat diverge between the architectural and design services subsectors. The expected business activity indicator has increased among architects, following a significant decline in anticipated business activity in the previous Barometer. Interior designers, on the other hand, report a slight decline in their expected business activity at 62, down 6 points relative to Q3. Both groups report slower business activity in Q3 2022 compared with the previous quarter.

- The Expected Business Activity Indicator related to project inquiries and new committed projects increased slightly to 56 in Q4, with architects at 52, which is an improvement from 42 in Q3, versus interior designers at 62, a drop of 6 points relative to Q3. The increase in the overall indicator is primarily driven by strong expectations for new committed projects at 62 in Q4 (up 11 points relative to Q3). Expectations for project inquiries are down by only 3 points in Q4 (49 compared with 52 in Q3).
- The Project Backlog Indicator is 7.6 weeks in the beginning of Q4. The wait times are 1.7 weeks shorter than they were one year ago.
- The Recent Business Activity Indicator related to project inquiries and new committed projects declined to 52 in Q3 (compared with 56 in Q2 2022), with interior designers at 60 versus architects at 47. This decline is the result of a drop in project inquiries to 50 (compared with 55 in Q2 2022) and a decrease in new committed projects to 54 (down 3 points from Q2 2022).


Regional Backlogs
For the construction sector, the East North Central division (including Illinois, Indiana, Michigan, Ohio and Wisconsin) has the longest backlog (12.6 weeks) driven primarily by build-only firms in the region (13.5 weeks), while design-build remodelers report 11.7 week wait times. Businesses in the Mountain division (which includes Arizona, Colorado, Idaho, Montana, New Mexico, Nevada, Utah and Wyoming) and in the West South Central division (Texas, Oklahoma, Arkansas and Louisiana) report backlogs of 7.9 weeks before they can begin a new project, the shortest wait time reported by construction firms among the nine Census divisions. Compared with the same quarter one year ago, backlogs for the construction sector are shorter across all nine Census divisions.

Backlogs also vary across all regional divisions among businesses in the architecture and design services sector. Businesses in the West North Central division (North Dakota, South Dakota, Nebraska, Kansas, Missouri, Iowa and Minnesota) reported backlogs of 9 weeks, while the West South Central division (including Texas, Oklahoma, Arkansas and Louisiana) showed much shorter backlogs at 6.1 weeks. Backlogs reported by interior designers in the West South Central division (12 weeks) are the driving force for long wait times, whereas wait times to begin a new project with an architect in that area is 7.2 weeks. Compared with the same quarter one year ago, backlogs for the architectural and design services sector are shorter across only three of the nine Census divisions (East North Central, Mountain and West North Central divisions).


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 with 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 2022 Barometer was fielded September 27 through October 5, 2022, and garnered responses from over 900 home improvement firms on Houzz. n=930.


About Houzz
Houzz is the leading platform for home remodeling and design, providing an all-in-one software solution for industry professionals and tools for homeowners to update their homes from start to finish. Using Houzz, people can find ideas and inspiration, hire professionals, and shop for products. Houzz Pro (houzz.com/pro) provides home industry professionals with a business management and marketing SaaS solution that helps them to win projects, collaborate with clients and teams, and run their business 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. For more information, visit houzz.com. Houzz is a registered trademark of Houzz Inc. worldwide.