Houzz Inc. recently released the 2024 Houzz U.S. State of the Industry, providing an outlook for 2024 and review of 2023 performance for residential renovation and design businesses based on data reported by more than 2,150 professionals in the Houzz community. Companies across industry sectors have higher expectations for business performance in 2024 than expectations at the same time last year, with more than 3 in 5 anticipating that 2024 will be a good or very good year (61% to 71% versus 50% to 56% in the same report a year ago). Pros forecast revenue growth along with improved demand for their services, despite rising costs of labor, products, and materials.
“Home industry professionals have greater optimism heading into 2024. They are expecting to turn the tide following a challenging year, where economic conditions, such as inflation and rising costs of labor and materials, resulted in fewer and smaller-scope projects,” said Marine Sargsyan, staff economist for Houzz. “With positive signs that inflation is easing somewhat and interest rates are stabilizing, pros anticipate an increase in the demand for their services in 2024. Many pros adopted new processes and became more selective with the types of projects they’ll take on, making their businesses more resilient.”
Firms across the design and construction industry implemented a variety of strategies in response to the challenges they faced last year and now expect an average range of 3.3% to 8.9% annual revenue growth in 2024.
2024 U.S. State of the Industry: Major Findings:
- Interior designers are the most bullish: Interior designers expect that 2024 will be a good or very good year (71%), followed by design-build firms and general contractors, remodelers and builders (66% and 65%, respectively).
- Revenue growth estimates rebound for design and architecture: Companies across all industry sectors expect an increase in revenue and profits in 2024 following a challenging 2023 environment. Among construction professionals, building and renovation specialists have the highest anticipated revenue growth, followed by general contractors, remodelers and builders, and design-build firms (8.1%, 7.7% and 3.3%, respectively).
- Improved demand for services expected: More than half of businesses across industry groups anticipate heightened demand for their services (54% to 62%), which is more than double those expecting improvements in the demand for their services at the beginning of last year (21% to 32%).
- Labor availability worsens as costs continue to rise: Ongoing labor shortages are a persistent challenge, as predicted by 6 out of the 7 industry groups.
- Product and material availability improves, at a higher cost: More companies across the industry expect product and material availability to improve than to worsen in 2024.
- Profits reported despite revenue deceleration: The residential design and construction industry experienced a deceleration in annual revenue growth in 2023, compared with the previous year. Despite revenue declines, pros were able to retain their profits, with a greater proportion of firms across 6 of the 7 industry groups reporting profit increases over decreases.
The complete 2024 Houzz U.S. State of the Industry report can be found here.