Houzz logs a blip in otherwise confident renovation sector

Houzz has released its relatively optimistic Q3 2015 Houzz Renovation Barometer, though third-quarter figures are dragging behind those of Q2.

Though optimism remains high across different types of industry professionals (with index scores of 65 or higher), third-quarter readings are 6% to 11% lower than those of second-quarter figures across all industry groups, landscape specialty firms excepted (those were down 21%, probably due to seasonal patterns).

"Barometer readings consistently show year-over-year gains in the past three quarters of 2015, pointing to healthy improvements in the remodeling industry in 2015 over 2014," said Houzz principal economist Nino Sitchinava. "The headwinds slowing overall industry performance are widespread labor shortages, particularly in the Midwest."

Among the top challenges is hiring, as Sitchinava alludes to. General contractors, remodelers and design-build firms say carpenters are in the shortest supply (cited by 45% of firms), followed by framers (25%), tile (22%) and drywall specialists (21%). These shortages are concentrated in the Midwest and least severe in the Northeast.

Additionally, more than one in five architects and interior designers report shortages of general contractors (24% and 21%, respectively).

However, new business growth is clocking in at high figures, even if readings are slightly down from Q2, likely due to the start of a seasonal slowdown.

Additionally, year-over-year improvements were in effect, with readings of 74-79.

The Barometer measures the proportion of firms reporting increases in quarterly business activity compared to those reporting decreases, with a higher number relative to 50 reflecting a higher proportion of positive growth.