Houzz Barometer Reports on Renovation Market Amidst COVID-19

by Emily Blackburn

Houzz Inc. released the Q2 2020 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, fielded from March 26 to April 8, 2020, provides insights into the impact of COVID-19 on the home renovation market.

“Despite beginning the year confidently, with a long backlog of work and high expectations, firms in the residential construction sector and the architectural and design services sector have experienced a sudden, dramatic shift in the wake of the COVID-19 pandemic,” said Marine Sargsyan, Houzz senior economist. “For the first time since launching the Houzz Barometer in 2015, a greater proportion of firms reported quarter-over-quarter decreases than those reporting increases. Faced with unprecedented challenges, residential construction, architecture and design firms are adopting business practices including new safety guidelines, remote collaboration tools, and online consultations, invoicing and payments.”

COVID-19’s Influence on Home Renovation and Design Businesses

The Recent Business Activity Indicator related to project inquiries and new committed projects decreased to 48 in Q1 (compared to 65 in Q4)

More than four in five small businesses in the architectural and design services sector and the construction sector have been impacted by the coronavirus pandemic. Meanwhile, one in seven anticipate a future impact. Of those businesses currently impacted by the pandemic, the most common effects include delays, fewer new business inquiries, and cancellations.

Architecture and design firms responded to pandemic-related business challenges by offering video consultations. In addition, they offered remote collaboration tools, and sourcing more products online. Construction businesses implemented new safety guidelines, temporarily closed offices or storefronts, and deferred hiring new employees. More than a quarter of businesses in both sectors adopted online invoicing and payments.

Short term indicators report a severe immediate impact on the home improvement market due to the coronavirus pandemic. However, a neutral to good outlook for 2020 prevails among both the architectural and design services and construction sectors.

Q2 2020 Construction Sector Barometer

    • The Expected Business Activity Indicator related to project inquiries and new committed projects declined significantly to 18 in Q2. This is compared to 74 in Q1. Both expectations for project inquiries and new committed projects were 18.
    • The Project Backlog Indicator remained steady at 5.4 weeks in Q2 relative to Q1, 1.1 weeks shorter than last year.
  • The Recent Business Activity Indicator related to project inquiries and new committed projects decreased to 48 in Q2. This was compared to 65 in Q1. Inquiries dropped to 46 in Q2, and new committed projects declined to 50.
  • Q2 2020 Architectural and Design Services Sector Barometer
  • The Expected Business Activity Indicator related to project inquiries and new committed projects decreased dramatically to 35 in Q2. Expectations also decreased for project inquiries at 31 and for new committed projects at 39 in Q2.
  • The Project Backlog Indicator decreased to 3.6 weeks in Q2, which is 1.1 weeks shorter than a year ago. These numbers are relative to 4.6 weeks in Q1.
  • The Recent Business Activity Indicator related to project inquiries and new committed projects decreased to 44 in Q2. Project inquiries dropped to 39, and new committed projects declined to 50.

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Notes to Editors

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. These track expected, current, and recent business activity in the construction and the architectural and design services sectors.

Detailed methodology and underlying quarterly indices for the construction sector and the architectural and design services sector, and other information on market conditions can be found on houzz.com/research.

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