Houzz Inc.’s Q4 2023 Houzz U.S. Renovation Barometer tracks residential renovation market expectations, project backlogs, and recent activity among businesses in the U.S. construction sector and the architectural and design services sector. Fielded from September 30 through October 12, 2023, the Barometer provides insights into the impact of recent economic volatility on the home improvement market. Findings diverge among the construction and architectural and design services sectors with the latter reporting increased business activity in the past quarter and optimism through the end of the year. By contrast, more professionals in the construction sector report declines in Q3 business activity than improvements, leading to a somewhat unfavorable outlook for Q4.
“Following improved Q3 business activity, architecture and design professionals are relatively optimistic about business through the end of the year,” said Marine Sargsyan, staff economist for Houzz. “However, as business activity continues to slow in the construction sector, build-only professionals in particular have a more negative perspective about the quarter. Despite this outlook, activity continues and backlogs remain at least one week longer than they were last year for the construction sector.”
Backlogs across the construction sector are at 11.4 weeks, up 0.9 weeks compared to the same period last year (10.5 weeks). High wait times of 15.1 weeks are reported by construction professionals in the West North Central region. By contrast, businesses in the architectural and design services sector report significantly shorter wait times (6.1 weeks), a decrease from last year (7.6 weeks).
The overall outlook among firms for the construction sector is unfavorable; however, expectations diverge among design-build firms and build-only remodelers. Design-build firms are more optimistic with an expected business indicator of 53 points, meaning that slightly more businesses anticipate growth than decline. Build-only remodelers anticipate slower activity than the previous quarter (41 in Q4 compared with 54 in Q3).
The positive sentiment among the architectural and design services sector is significantly stronger for Q4 (at 61) than the previous quarter (52). More firms expect business activity to improve than those that expect slowdowns. Both interior designers and architects report improved Q3 business activity, though interior designers (64) are somewhat more optimistic than architects (59) that business growth will continue.
For the construction sector, the West North Central division (including Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota) has the longest backlog (15.1 weeks) driven by wait times reported by build-only and design-build firms in the region (18.3 and 12 weeks, respectively). Businesses in the East South Central division (including Alabama, Kentucky, Mississippi and Tennessee) report backlogs of five weeks before they can begin a new project, the shortest wait time reported by construction firms among the nine Census divisions.