The remodeling and design industries continue to defy expectations amid the pandemic as business returns to pre-pandemic levels heading into Q4, according to the Houzz Renovation Barometer, which measures residential renovation market expectations, project backlogs and company’s recent activity.
“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,” Marine Sargsyan, Houzz senior economist, says. “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.”
The Q4 2020 Barometer received responses from 261 build-only remodelers and 601 design and build remodelers from September 24th, 2020 through October 7th, 2020. Altogether, the survey garnered responses from nearly 1,700 home improvement firms.
2020 Q4 Houzz Renovation Barometer Takeaways
Project inquiries and new committed projects skyrocket
The Q4 Barometer report shows that recent business activity soared past predictions in Q3 for both construction and design sectors. Construction’s indicator rose to 75 in Q3 (compared to 49 in Q2) and architecture/design’s indicator jumped to 61 in Q3 (compared to 48 in Q2). Increases in project inquiries (up 24 points in construction and 7 in architecture/design) and new commited projects, which rose 19 points in both sectors, spurred this flurry of activity.
Backlogs are backing up in a good way
For the construction remodeling sector, the Project Backlog Indicator increased to 7.2 weeks in Q4, which is two weeks longer than a year ago. Pros in the Northeast and Midwest reported especially longer backlogs. Meanwhile, the Project Backlog Indicator for the design and architecture sector remained steady at 4.5 weeks in Q4, which is 0.4 weeks longer than a year ago.
Expected business dips, but remains strong
Pros in both the construction and architectural/design service sectors predict a dip in business heading into winter (from 75 in Q3 to 73 and 67 in Q3 to 62, respectively). But the decrease from last quarter is still miles ahead of the score of 18 in Q2. The expected Q4 numbers are on pace to remain at pre-pandemic levels. An even closer look reveals that those in the construction sector expect a decrease in inquiries but an increase in new committed projects. “The results show a greater proportion of firms reported quarter-over-quarter increases than those reporting decreases,” Houzz said in the report.
Pros embrace new technology
Construction businesses have started using new safety guidelines, video consultation tools, and online product sourcing (60, 33, and 31 percent, respectively). Along with those three changes, architecture and design firms have also started providing remote collaboration tools. 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).