PALO ALTO, Calif. — A new report points to mixed expectations for home renovation market activity in the first quarter of the year.

The report (The Q1 2019 Houzz Renovation Barometer) was conducted by Houzz Inc. 

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.

“Current Barometer readings and qualitative feedback reflect a mixed degree of caution about market conditions among contractors, architects and designers,” said Nino Sitchinava, Houzz principal economist.

“It is notable that, relative to a year ago, expectations and recent activity among contractors are more subdued and project backlogs are considerably lighter. In contrast, the sentiments and backlogs of architects and designers are on par with a year ago, likely explained by a boost in new business activity in the last quarter of 2018. That said, businesses overwhelmingly cite rising costs of products and materials and customers’ reluctance to proceed with the projects due to these costs.”

Construction Sector

• The Expected Business Activity Indicator related to project inquiries and new projects decreased to 72 in Q1 (down seven points relative to Q4). The decline follows decreases in both components, with expectations for project inquiries falling to 72 in Q1 (down seven points), and expectations for new projects also decreasing to 72 (down seven points).
• The Project Backlog Indicator slightly increased to 4.8 weeks nationally in Q1 (up 0.3 weeks relative to Q4). That said, overall backlog for the construction sector is 1.7 weeks below year-over-year levels.
• The Recent Business Activity Indicator related to project inquiries and new projects decreased to 67 in Q4 (down four points relative to Q3). The decline follows a decrease in both project inquiry activity, which fell to 67 in Q4 (down six points), and recent new projects activity, which decreased to 66 (down three points).

Architectural and Design Services Sector

• The Expected Business Activity Indicator related to project inquiries and new projects remained nearly unchanged at 65 in Q1 (up one point relative to Q4). Expectations for project inquiries were at 64 (up one point) and expectations for new projects remained at 65.
• The Project Backlog Indicator slightly decreased to 4.7 weeks nationally in Q1 (down 0.4 weeks relative to Q4). The overall backlog for the architectural and design services sector is 0.2 weeks below year-over year levels.
• The Recent Business Activity Indicator related to both project inquiries and new projects increased to 65 in Q4 (up five points relative to Q3). The uptick follows an increase in both recent project inquiry activity, which increased to 65 in Q4 (up three points), and recent new project activity, which increased to 65 (up seven points).

The Q1 2019 Barometer was fielded Dec. 27 through Jan. 9 and garnered responses from more than 2,200 small businesses on Houzz. The Q2 2019 Houzz Renovation Barometer release date is April 11.