Houzz Inc. today released the Q3 2019 Houzz Renovation Barometer, which 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 U.S. The Barometer points to mixed expectations for home renovation market activity in the third quarter of the year.
“The third quarter outlook for the architecture and design sector is the most optimistic of the past two years. However, construction sector sentiments are some of the lowest we’ve seen since 2015, although still high in absolute terms,” said Nino Sitchinava, Houzz principal economist. “Weather was the leading concern among construction businesses in the second quarter, which is understandable, since it was the wettest quarter in the U.S. since 1957. Hitting a two-year low, average construction project backlogs also declined at the start of Q3, implying that households are reluctant to start construction this late in the year. While labor shortages are top of mind for construction and architecture businesses alike, a third of businesses report a negative impact from tariffs, with rising material costs eroding margins on existing contracts and causing unease among prospective customers”
Construction Sector
· The Expected Business Activity Indicator related to project inquiries and new committed projects decreased to 71 in Q3 (down three points relative to Q2). The decrease is a result of a decline in expectations for both project inquiries (down two points to 72 in Q3) and new committed projects (down three points to 70 in Q3).
· The Project Backlog Indicator decreased to 4.3 weeks in Q3 relative to Q2 (5.0 weeks). Wait times are 2.2 weeks shorter than a year ago.
· The Recent Business Activity Indicator related to project inquiries and new committed projects declined to 64 in Q2 (down three points relative to Q1). This follows a decline in project inquiries to 64 in Q2 (down two points relative to Q1), and a decrease in new committed projects to 64 compared to Q1 (down three points).
Architectural and Design Services Sector
· The Expected Business Activity Indicator related to project inquiries and new committed projects increased slightly to 71 in Q3 (up one point relative to Q2). Expectations increased for project inquiries (up three points to 70 in Q3) and remained steady for new committed projects (at 72 in Q3).
· The Project Backlog Indicator remained steady at 4.7 weeks in Q3 relative to Q2 (4.7 weeks). Wait times are 0.9 weeks shorter than a year ago.
· The Recent Business Activity Indicator related to project inquiries and new committed projects remained steady at 63 in Q2.
