Houzz Inc., the leading home improvement and design platform, today released the Houzz Q2 2022 Renovation Barometer*, which found construction companies tempered their positive outlook for the commercial activity expected in the second quarter of 2022 compared to the peak of the last quarter, despite a strong performance in the first quarter. While architecture and design professionals remain confident about their business prospects, this has eased slightly, with expectations lowering somewhat for project inquiries and new projects committed. Order books reached three months for construction professionals and nearly two months for architecture and design professionals.
“While business activity and confidence in demand for construction and design services was the strongest we’ve seen in the past four quarters, industry professionals are cautious about expected performance in the second quarter.” , said Marine Sargsyan, economist at Houzz. “Pros anticipate some impact on project requests due to inflation, supply chain delays and rising material costs, such as wood, aluminum and even gasoline. However, long backlogs persist in the second quarter, signaling continued home renovation and design activity.
Barometer of the construction sector Q2 2022
In the construction industry, construction-only and design-build professionals are in line with expected business performance, although sentiments differ on recent business activity for the first quarter of 2022. While renovators in construction only report stronger activity compared to the fourth quarter of 2021, design-build companies saw a slight decline in activity in Q1 2022 compared to the previous quarter.
- The expected business activity indicator related to project inquiries and new projects committed decreased to 67 in Q2 (from 79 in Q1). Expectations for project inquiries fell significantly to 65 from 80 in the first quarter, and new projects committed are at 69 in the second quarter, down nine points from the first quarter.
- The project delay indicator reached 12 weeks in the second quarter, which is the highest since 2017. Compared to the same period last year, delays are 2.7 weeks longer.
- The recent business activity indicator related to project inquiries and new projects committed increased significantly to 71 in Q1 (from 65 in Q4 2021). This is due to a four point increase in project requests in the first quarter compared to the previous quarter) and a significant increase in new projects committed to 72 (64 points compared to the fourth quarter of 2021).
Barometer of the architectural and design services sector Q2 2022
Business performance expectations diverge somewhat between the architectural and design services subsectors. Interior designers expressed optimism for business in the second quarter, reporting higher expectations than last quarter for newly committed projects. Architects tempered their outlook, anticipating a drop in project requests and new projects being committed. Both groups report slower business activity in the first quarter of 2022 compared to the previous quarter.
- The expected business activity indicator related to project inquiries and new projects committed fell to 65 in the second quarter. This decline is mainly due to lower expectations for project applications to 63 in Q2 (down 8 points from Q1), however, expectations for new committed projects increased to 68 in Q2 (from 67 in T1).
- The project backlog indicator remains at 7.9 weeks at the start of the second quarter, which is consistent with the previous quarter, but slightly shorter than a year ago (8.4 weeks in the second quarter of 2021 ).
- The recent business activity indicator related to project inquiries and new projects committed fell to 63 in the first quarter (from 65 in the fourth quarter of 2021). This decline is the result of a drop in project requests to 62 (from 67 in Q4 2021) and an increase in new projects committed to 63 in Q1 (up one point from Q4 2021).
Backlogs continue to grow in the industry, with the time before professionals can begin work on a new medium-sized project stretching further across the country. In fact, wait times are the longest from the start of any year since 2018. Backlogs vary widely by geography, but are longer in Q2 2022 than they were in Q2 2021 in all nine census divisions in the United States.
- For the construction sector, the East North Central division (comprising Michigan, Wisconsin, Illinois, Ohio and Indiana) has the longest backlog (13.8 weeks) driven mainly by area design-build firms (19.4 weeks), while construction-only renovators report wait times of 8.1 weeks. Businesses in the East South Central Division (which includes Kentucky, Tennessee, Mississippi and Alabama) are reporting 9.4 weeks of backlogs before they can start a new project, the shortest wait time reported by construction companies among the nine census divisions. Backlogs in the construction sector are similar or longer than a year ago in all nine census divisions.
- Order books also vary across regional divisions among companies in the architectural and design services sector. Businesses in the Middle Atlantic division (including New York, Pennsylvania and New Jersey) reported backlogs of 9.9 weeks, while the West North Central division (including North Dakota, South Dakota, Nebraska , Kansas, Minnesota, Iowa and Missouri) posted much shorter delays. arrears at 6.2 weeks. Backlogs reported by architects (12.4 weeks) in the Mid-Atlantic division are driving long wait times, while wait times to start a new project with an interior designer in this region are only 5.7 weeks. Compared to the same quarter a year ago, backlogs in the architectural and design services industry are shorter in five of nine census divisions (Southeast Central, Mountain, New England, of the South Atlantic and the Central-Northwest).
*The Houzz Renovation Barometer tracks home improvement market expectations, project delays, and recent activity by U.S. companies in the construction industry and the architectural and design services industry.
The Houzz Renovation Barometer is based on a quarterly online survey sent to a national panel of businesses with an online profile on Houzz. The Barometer keeps the pulse of home improvement market conditions through three separate indices that track expected, current and recent business activity in two related industry sectors, the construction sector and the architectural and architectural services sector. design.
The expected business activity indicator is based on survey questions that ask companies to indicate whether they expect the number of project inquiries and new projects committed to increase, decrease, or stay the same. unchanged in the next quarter compared to the previous quarter. Scores for each component are then calculated as seasonally adjusted diffusion indices on a scale of 0 to 100, with index values above 50 indicating that a greater proportion of firms reported increases of one quarter-over-quarter than those reporting declines.
The recent business activity indicator is based on survey questions that ask companies to indicate whether they have observed that the actual number of project inquiries and new projects committed has increased, decreased or remained unchanged over the past during the last quarter compared to the previous quarter. The scores for each component are then calculated as seasonally adjusted diffusion indices similar to the expected business activity indicator. Recent business activity indicator scores can be compared to expected business activity indicator scores for a given quarter to see if actual activity met, exceeded or fell short of expectations.
Finally, the Backlog indicator is based on survey questions that ask companies to report wait times in weeks before a company can begin work on a new medium-sized project. Scores are calculated as average wait times without seasonal adjustment.
The three indices are calculated individually for two sub-sectors of the construction sector (construction only renovators and design and construction renovators) and for two sub-sectors of the architectural and design services sector (architects and designers of interior), as well as for nine regions that follow the United States. Census Bureau Divisions. Aggregate national indices are calculated using industry subsector weights and regional weights derived from the 2016 U.S. Census County Business Models Survey. The detailed methodology and underlying quarterly indices for the construction industry and the architectural and design services industry, as well as other information on market conditions, can be found at houzz.com/research.
The 2022 Q2 Barometer was conducted from March 27 to April 7, 2022 and garnered responses from over 1,000 home improvement companies on Houzz. n=1066.
Houzz is the leading home improvement and home design platform, giving people everything they need to improve their home from start to finish. On Houzz, people can find design inspiration, find and hire home professionals, and shop for products to complete their projects. For home professionals, Houzz Pro (houzz.com/pro) provides an all-in-one software solution that enables industry professionals to stand out, win clients, and manage their projects efficiently and effectively. profitable. The Houzz community is made up of millions of homeowners, interior design enthusiasts, and home improvement professionals around the world. Houzz is available on the web and as a premium mobile app. Houzz is a registered trademark of Houzz Inc. worldwide. For more information, visit houzz.com.
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