Houzz Study Finds Industry Confidence with Slight Seasonal Slowdown
October 21, 2015
Houzz has released the Q3 2015 Houzz Renovation Barometer, which tracks confidence in the home renovation market among industry professionals. The Q3 2015 Barometer revealed that optimism in quarter-over-quarter market improvements remains high across industry professionals, with high index scores of 65 or higher in market confidence. However, readings for Q3 of 2015 are six to 11 percent lower than readings from Q2 across all industry groups. Landscape specialty firms are the exception, having reported a decrease of 21 percent, likely due to seasonal patterns.
Hiring remains a top challenge for renovation professionals across industry sectors in Q3. General contractors (GCs), remodelers and design-build firms report that carpenters are in the shortest supply across the U.S. (cited by 45 percent of firms), followed by framers (25 percent), tile (22 percent) and drywall specialists (21 percent). More than one in five architects and interior designers report shortages of general contractors (24 percent and 21 percent respectively). Labor shortages are reported to be most prevalent in the Midwest and least severe in the Northeast.
“The shortages of labor stem from a significant decline in the specialized and general labor force in the building/renovation industry during the recent recession,” said Nino Sitchinava, principal economist at Houzz. “The industry’s labor force is far from being restored, while majority of the remodeling professionals report the revenues and profits are at or above the pre-recession levels. Labor shortages are likely to continue for the next year with negligible signs of improvements in the near term.”
Additional findings from the Q3 2015 Houzz Barometer include:
Widespread New Business Growth:
Firms report growth across the number of new business inquiries, and the number and size of new projects in Q3 (Barometer readings of 63-74, 66-74 and 60-69, respectively).
Readings are down slightly from Q2 across all three leading new business indicators, likely due to the start of a seasonal slowdown, as well as the backlog of projects from the spring months, among other factors.
Year-Over-Year Gains Continue:
Widespread year-over-year improvements continued across all industry groups in Q3 2015, relative to the same period in 2014. The Barometer posted readings of 74-79, largely in line with Q2 scores (75-83). Readings in excess of 70 points for all three quarters of 2015 point to strong industry confidence in renovation market improvements in 2015 relative to 2014.
Outdoor Specialty Confidence Varied by Region:
While outdoor specialty firms are feeling the seasonal slowdown earlier than other industry groups, Northeastern and Midwestern outdoor firms are hit the hardest,
as reflected by the 36 percent and 30 percent quarter-over-quarter decreases in Barometer scores for the third quarter, respectively. Meanwhile, outdoor firms in the South and West saw significantly lower decreases (21 percent and 10 percent respectively).
“The consistent year-over-year confidence among outdoor/landscape specialty firms, as reported in the Houzz Renovation Barometer, is a leading indicator of a continued improvement in the outdoor renovation sector,” said Sitchinava. “Furthermore, the mid-year survey of outdoor professionals on Houzz revealed that revenues and profits are at or above the levels they considered normal before the Great Recession for 75 percent of the firms. Thus, despite extreme weather patterns in some parts of the country, the outdoor renovation sector is expected to continue to improve into the next year.”
The Houzz Renovation Barometer study is conducted quarterly and presents analysis of responses to an online survey sent out to a national U.S. panel of architects, interior designers, general contractors/remodelers, design-build firms, and building/renovation and landscape/outdoor specialties.
The next Houzz Renovation Barometer release date is January 20, 2016.