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11 april 2019
Houzz Barometer Finds Home Renovation Professionals Confident About Q2 Business Activity, Despite Moderate Q1
Project backlogs for home remodeling and design businesses fall short of 2018 levels, but remain steady quarter over quarter


Houzz Inc., the leading platform for home remodeling and design, today released the Q2 2019 Houzz Renovation Barometer, which tracks residential renovation market expectations, project backlogs and recent activity among businesses in the construction sector and the architectural and design services sector in the U.S. The Barometer points to optimism among home renovation professionals for business activity in the second quarter of the year.

“This year’s residential renovation activity is already looking very different from 2018.
Professional sentiments for the first quarter were considerably more tempered and businesses are starting the second quarter with much shorter backlogs relative to a year ago,” said Nino Sitchinava, Houzz principal economist. “Home professionals attribute the slowdown to unusually cold and wet weather conditions, in addition to consumer apprehension caused by the government shutdown, tax refund uncertainty, and the high costs of products and materials. Despite many of these concerns, the business outlook for the next three months is upbeat, with many anticipating an increased demand for exterior upgrades necessitated by winter storms.”

Construction Sector

- The Expected Business Activity Indicator related to project inquiries and new committed projects increased to 74 in Q2 (up two points relative to Q1). The increase is a result of an uptick in expectations for both project inquiries (up two points to 74 in Q2) and new committed projects (up one point to 73 in Q2).
- The Project Backlog Indicator increased to 5.0 weeks (up 0.2 weeks) in Q2 relative to Q1. That said, it is 4.8 weeks less than a year ago.
- The Recent Business Activity Indicator related to project inquiries and new committed projects remained unchanged at 67 for Q1. This follows a decline in project inquiries to 66 in Q4 (down one point), and an increase in new committed projects to 67 in Q4 (up one point).

Architectural and Design Services Sector

- The Expected Business Activity Indicator related to project inquiries and new committed projects increased to 70 in Q2 (up five points relative to Q1). Expectations increased for both project inquiries (up three points to 67 in Q2) and new committed projects (up seven points to 72 in Q2).
- The Project Backlog Indicator remained steady at 4.7 weeks in Q2, 1.4 weeks less than last year (6.1 weeks at the start of Q2 2018).
- The Recent Business Activity Indicator related to project inquiries and new committed projects decreased to 63 in Q1 (down two points relative to Q4).

Notes to Editors
The Houzz Renovation Barometer is based on a quarterly online survey sent to a national U.S. panel of businesses with an online profile on Houzz. The Barometer keeps a pulse on home renovation market conditions via three distinct indices that track expected, current, and recent business activity in two related industry sectors, the construction sector and the architectural and design services sector.

The Expected Business Activity Indicator is based on survey questions that ask businesses to report whether they expect the number of project inquiries and new committed projects to increase, decrease or stay unchanged in the upcoming quarter relative to the prior quarter. Scores for each component are then computed as a seasonally adjusted diffusion indices on a scale of 0 to 100, with index values over 50 indicating that a greater proportion of firms reported quarter-over-quarter increases than those reporting decreases.

The Recent Business Activity Indicator is based on survey questions that ask businesses to report whether they observed the actual number of project inquiries and new committed projects increasing, decreasing or staying unchanged in the most recent quarter relative to the prior quarter. Scores for each component are then computed as a seasonally adjusted diffusion indices similar to the Expected Business Activity Indicator. Recent Business Activity Indicator scores can be compared to the Expected Business Activity Indicator scores for any given quarter to see whether actual activity met, exceeded, or fell short of expectations.

Finally, the Backlog Indicator is based on survey questions that ask businesses to report wait times in weeks before a company can start work on a new midsize project. Scores are computed as average wait times without a seasonal adjustment.

All three indices are computed individually for three subsectors in the construction sector (build only remodelers, design and build remodelers, and specialty trade contractors) and for two subsectors in the architectural and design services sector (architects and interior designers), as well as for nine regions that follow U.S. Census Bureau Divisions. The aggregated national indices are computed using industry subsector weights and regional weights derived from the 2016 U.S. Census County Business Patterns survey. Detailed methodology and underlying quarterly indices for the construction sector and the architectural and design services sector, and other information on market conditions can be found on houzz.com/research.

The Q2 2019 Barometer was fielded March 28th through April 10th and garnered responses from more than 2,000 small businesses on Houzz. n=2,065.

The Q3 2019 Houzz Renovation Barometer release date is July 16, 2019.

About Houzz

Houzz is the leading platform for home remodeling and design, providing people with everything they need to improve their homes from start to finish – online or from a mobile device. From decorating a small room to building a custom home and everything in between, Houzz connects millions of homeowners, home design enthusiasts and home improvement professionals across the country and around the world. With the largest residential design database in the world and a vibrant community empowered by technology, Houzz is the easiest way for people to find inspiration, get advice, buy products and hire the professionals they need to help turn their ideas into reality. Headquartered in Palo Alto, Calif., Houzz also has international offices in London, Berlin, Sydney, Moscow, Tel Aviv and Tokyo. Houzz is a registered trademark of Houzz Inc. worldwide. For more information, visit houzz.com.