Houzz, the home remodeling and design platform, has released its annual U.S. State of the Industry report which reveals a four-year high in revenue growth.
The report also offers predictions for the rest of 2022 based on data from more than 2,800 professionals across seven home design sectors: architects, interior designers, general contractors (grouped with remodelers and builders), design-build firms, renovation specialty firms, landscape specialty firms and decorating specialty firms. And the home improvement industry seems confident.
“Following a busy year for the home renovation and design industry … Professionals are bullish that momentum will continue through 2022,” Houzz Senior Economist Marine Sargsyan said in a press release. “The positive outlook is prevalent across industry groups from architects and designers to builders and landscapers, despite headwinds in the form of labor and product availability and price volatility.”
More specifically, 71 to 77% of the participating residential construction and design companies predict that 2022 will be a good or very good year. And of the seven sectors surveyed, architects have the most optimistic outlook — for the first time since 2018. Seventy-seven percent of architects expect a good or very good year, followed closely by general contractors and design-build companies (both at 73%). Businesses across all industry groups anticipate revenue to grow between 5 and 9% in 2022.
That confidence follows substantial 2021 returns, which surpassed last year’s expectations. The businesses surveyed all reported revenue growth between 9 and 12%, marking the highest year-over-year increase in the last four years. Five of the seven sectors saw revenue surge by more than 10%.
And with industry growth, hiring is also on the rise with more employees hired in 2021 than in 2020. Design-build firms hired the most, showing a 34% year-over-year increase in employees,
followed by general contractors and builders (both at 28%) and landscaping firms (27%). Overall, hiring is expected to continue across all industry sectors in 2022 although companies expect labor availability to worsen — likely raising business costs.
Of the total professionals surveyed, roughly half expect the workforce to shrink and, across all seven sectors, between 49 and 64% respondents believe this will hike costs. And, as material shortages continue, those labor challenges arise alongside more general price volatility.
All seven sectors listed the price volatility of products and materials as one of their top concerns. General contractors, design-build firms and renovation specialists cited price volatility (47 to 55%) and the availability of materials (37 to 40%) as the leading challenges faced during 2021. Additionally, more than half of companies’ surveyed groups expect the price of product and materials to rise further in 2022.
However, increased demand is still anticipated across all seven industry sectors. Between 41 and 54% of respondents believe that demand for their services will increase in 2022, with interior designers demonstrating the greatest confidence: 54% say demand for their services will grow.
“Accumulated home equity and other industry fundamentals continue to drive demand for improvements to aging housing stock and upgrades that will enable homeowners to stay in their homes long into retirement years,” Sargsyan said.