Renovations should rise in Q4, survey says
Q3 of 2024 was a bit glum for the U.S. housing market. However, builders are expecting better times just ahead.
According to the Q4 2024 Houzz Renovation Barometer, which gathered responses from 118 build-only remodelers and 310 design-build remodelers from September 26 through October 9, residential construction pros are increasingly optimistic as we head toward year-end. Houzz data shows more firms are anticipating an increase in business activity than a decrease in the final quarter of 2024. Overall, it's a 10-point jump from last quarter's data.
Houzz found decreases in Q3 business activity indicators compared with Q2 among home remodeling and design professionals. Businesses in the construction sector reported a decline in business activity compared with Q2, dipping below the 50-point line. Despite lagging sentiment, and rising anxiety about the upcoming election, businesses across all sectors remain hopeful about activity in the coming quarter.
"Business activity slowed in Q3, especially in the construction sector, with fewer project inquiries and commitments compared with Q2," said Marine Sargsyan, Houzz staff economist. "However, the outlook for Q4 is more positive, especially among architectural and design firms, driven by anticipated economic growth, declining interest rates and larger project budgets. Those anticipating gains cite these favorable conditions, while others remain cautious due to economic uncertainty, current interest rates and tighter budgets. The broader political environment, including uncertainty around upcoming elections, also adds to the industry's caution."
Q4 2024 construction sector highlights
Houzz offers additional takeaways and insights below.
The Expected Business Activity Indicator related to project inquiries and new committed projects increased 10 points to 62 for Q4 (from 52 in Q3) for construction pros. Compared with Q3 2024, Q4 expectations for project inquiries increased 7 points to 59, and new committed projects increased 12 points to 64. The index is above 50 points, which suggests businesses expect Q4 performance to surpass Q3.
The Houzz Project Backlog Indicator is 10.5 weeks (for all the U.S.) in the beginning of Q4, which is 0.9 weeks shorter than a year ago. Build-only remodelers report a substantial decrease of 2.3 weeks to 8.3 weeks, while design-build remodelers report a 0.6 week increase in wait times at 12.8 weeks.
The Recent Business Activity Indicator related to project inquiries and new committed projects decreased to 47 in Q3 2024, down 5 points from Q2, indicating slower business activity in Q3 compared with Q2. This is driven by a 6-point decrease in project inquiries to 46 in Q3, relative to the previous quarter, and a 4-point decrease in new committed projects to 48. Among the two reporting groups, build-only remodelers reported a larger dip in recent business activity (from 53 in Q2 to 46 in Q3), while design-build remodelers reported a 3-point decline (from 51 in Q2 to 48 in Q3).
