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14 april 2020
Houzz Barometer Reports on Home Renovation Market Sentiment Amidst COVID-19
Home professionals adopt new safety guidelines and remote collaboration and business tools to address pandemic-related challenges


Houzz Inc., the leading platform for home remodeling and design, today released the Q2 2020 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, which was fielded from March 26 to April 8, 2020, provides timely insights into the impact of COVID-19 on the home renovation market.

“Despite beginning the year confidently, with a long backlog of work and high expectations, firms in the residential construction sector and the architectural and design services sector have experienced a sudden, dramatic shift in the wake of the COVID-19 pandemic,” said Marine Sargsyan, Houzz senior economist. “For the first time since launching the Houzz Barometer in 2015, a greater proportion of firms reported quarter-over-quarter decreases than those reporting increases. Faced with unprecedented challenges, residential construction, architecture and design firms are adopting business practices including new safety guidelines, remote collaboration tools, and online consultations, invoicing and payments.”

COVID-19’s Influence on Home Renovation and Design Businesses
More than four in five small businesses in the architectural and design services sector and the construction sector have been impacted by the coronavirus pandemic (84 percent, each), while one in seven anticipate a future impact (15 and 13 percent, respectively). Of those businesses currently impacted by the pandemic, the most common effects include project delays (75 and 78 percent, respectively), fewer new business inquiries (75 percent, each) and project cancellations (61 and 63 percent, respectively).

Architecture and design firms responded to pandemic-related business challenges by offering video consultations and remote collaboration tools, and sourcing more products online (49, 48 and 34 percent, respectively). Construction businesses implemented new safety guidelines, temporarily closed offices or storefronts, and deferred hiring new employees (57, 34 and 33 percent, respectively). More than a quarter of businesses in the architectural and design services sector and the construction sector also adopted online invoicing and payments (30 and 27 percent, respectively).

While short term indicators report a severe immediate impact on the home improvement market due to the coronavirus pandemic, a neutral to good outlook for 2020 prevails among both the architectural and design services and construction sectors (56 and 66 percent, respectively).

Q2 2020 Construction Sector Barometer
- The Expected Business Activity Indicator related to project inquiries and new committed projects declined significantly to 18 in Q2 (compared to 74 in Q1). Both expectations for project inquiries and new committed projects were 18.
- The Project Backlog Indicator remained steady at 5.4 weeks in Q2 relative to Q1, which is 1.1 weeks shorter than a year ago.
- The Recent Business Activity Indicator related to project inquiries and new committed projects decreased to 48 in Q2 (compared to 65 in Q1). This decline is driven by both project inquiries, which dropped to 46 in Q2 (down 21 points relative to Q1), and new committed projects, which declined to 50 (down 12 points relative to Q1).

Q2 2020 Architectural and Design Services Sector Barometer
- The Expected Business Activity Indicator related to project inquiries and new committed projects decreased dramatically to 35 in Q2 (compared to 68 in Q1). Expectations also decreased for project inquiries at 31 and for new committed projects at 39 in Q2.
- The Project Backlog Indicator decreased to 3.6 weeks in Q2 (relative to 4.6 weeks in Q1), which is 1.1 weeks shorter than a year ago.
- The Recent Business Activity Indicator related to project inquiries and new committed projects decreased to 44 in Q2 (compared to 62 in Q1). This decline is driven by both project inquiries, which dropped to 39 (down 24 points in Q2 relative to Q1), and new committed projects, which declined to 50 (down 10 points relative to Q1).

Notes to Editors
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 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 two subsectors in the construction sector (build only remodelers and design and build remodelers) 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 2020 Barometer was fielded March 26th, 2020 through April 8th, 2020 and garnered responses from over 2,000 home improvement firms on Houzz. n=2,055.

The Q3 2020 Houzz Renovation Barometer release date is July 14, 2020.

About Houzz

Houzz is the leading platform for home renovation and design, providing people with everything they need to improve their homes from start to finish. On Houzz, people can find design inspiration, research 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 empowers industry pros to stand out, win clients and manage their projects efficiently and profitably. The Houzz community is made up of millions of homeowners, home design enthusiasts and home improvement professionals around the world. Houzz is available on the web and as a top-rated mobile app. Headquartered in Palo Alto, California, 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.