PALO ALTO, Calif. — Houzz Inc., a platform for home remodeling and design, has released the Q1 2022 Houzz Renovation Barometer, which found that the confidence level among construction professionals is at its highest point since 2018.
The Q1 Barometer was fielded Jan. 16-24 and garnered responses from 1,200 home improvement firms on Houzz. It tracks residential renovation market expectations, project backlogs and recent activity among U.S. businesses in the construction sector and the architectural and design services sector.
“Confidence among businesses in the residential construction and design industry has remained high since the initial shock of the pandemic and continues into 2022,” said Marine Sargsyan, Houzz senior economist. “Businesses are facing product and material shortages and price volatility, lack of labor availability and fluctuations in interest rates, which may be impacting the Recent Business Activity Indicator.
“That said, even with long wait times, businesses report no respite from pent-up demand, confirming long-standing market fundamentals.”
Q1 2022 Construction Sector Barometer
In the construction industry, professionals are aligned on anticipated business performance although sentiments diverge on recent business activity for Q4 2021. While build-only remodelers report slower activity compared with Q3, design-build firms experienced a slight increase in Q4 2021 activity.
The Expected Business Activity Indicator related to project inquiries and new committed projects increased to 79 in Q1 (compared with 74 in Q4 2021), and the Project Backlog Indicator reached 11.4 weeks in Q1, which is more than a month longer compared with the same period a year ago (7.4 weeks).
The Recent Business Activity Indicator related to project inquiries and new committed projects dropped significantly to 65 in Q4 (compared with 73 in Q3). This is driven by a decline in project inquiries and by a significant decline in new committed projects .
Q1 2022 Architectural and Design Services Sector Barometer
Interior designers expressed optimism for business in Q1, reporting higher expectations than last quarter for project inquiries and new committed projects. Architects have changed their outlook, anticipating decreases in project inquiries and newly committed projects.
Both groups report slower business activity in Q4 2021 compared with the previous quarter.
The Expected Business Activity Indicator related to project inquiries and new committed projects remained the same in Q1 at 69. The Project Backlog Indicator reached 7.9 weeks in the beginning of Q1, two weeks longer than a year ago (5.6 weeks).
The Recent Business Activity Indicator related to project inquiries and new committed projects declined to 65 in Q4 2021 (compared with 70 in Q3).
Regional Backlogs
Backlogs continue to grow across the industry, lengthening the time before people can begin working on new, mid-sized projects. Wait times are the longest when comparing the start of any year since 2018.
For the construction sector, New England has the longest backlog (13.3 weeks). Meanwhile, businesses in the West South-Central division (which includes Texas, Oklahoma, Arkansas and Louisiana) report 8.1 weeks of backlogs before they can begin a new project, the shortest wait time reported by construction firms among the nine census divisions.
Backlogs also vary across all regional divisions for the architecture and design services sector. Businesses in the East North Central division (including Wisconsin, Michigan, Illinois, Indiana and Ohio) reported 10 week backlogs, while the East South Central division (including Kentucky, Tennessee, Alabama and Mississippi) showed much shorter backlogs at 4.7 weeks.
Compared with the same quarter one year ago, backlogs are longer across all nine census divisions.
