According to new data from home improvement and design website Houzz, U.S. construction businesses have a positive sentiment regarding home improvement activity in the first quarter of the year, but are tempering their outlook due to ongoing market volatility.
The Q1 2020 Houzz Renovation Barometer tracks residential renovation market expectations among hundreds of U.S. construction companies. In the latest report, the Expected Business Activity Indicator related to project inquiries and new committed projects remained high, though it decreased 3 basis points from Q4 2020.
Additionally, the report’s Project Backlog Indicator increased to 7.4 weeks in Q1 relative to Q4 2020, which is two weeks longer than at this point last year.
The report confirms its Recent Business Activity Indicator declined substantially to 62 basis points in Q4, down from 75 basis points in Q3.
“Businesses in the home remodeling industry are kicking off the year with cautious optimism,” says Marine Sargsyan, Houzz senior economist. “Favorable interest rates and increased pandemic-related demand for remodeling have given architectural and design firms confidence for Q1 compared with the previous quarter. Yet, construction businesses have tempered their expectations slightly as they continue to face supply chain constraints, labor shortages and increasing costs for materials, such as lumber.”
How COVID-19 Is Impacting the Market
“We have observed an increase throughout the pandemic in the adoption of online tools that help residential design and construction firms connect with customers and manage their businesses,” says Liza Hausman, Houzz vice president of industry marketing. “The use of online invoicing and payments, for example, has grown steadily over the past few quarters across industry groups, which has been echoed by activity we’re seeing on our Houzz Pro business management and marketing software.”
Specifically, construction businesses implemented new safety guidelines, utilized video consultation tools and sourced more products online (68, 39 and 33 percent, respectively). A growing number of businesses in the construction sectors also adopted online invoicing and payments.
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 Q1 2021 Barometer was fielded from Jan. 7 through Jan. 25 and garnered responses from 229 build-only remodelers and 572 design and build remodelers.