Houzz Inc. recently released its Q1 2025 Houzz U.S. Renovation Barometer. The Q1 2025 report finds that businesses across the building industry are optimistic about activity in the first quarter of this year. Expectations among construction professionals are at their highest since Q3 2022. This rising optimism follows improved Q4 business activity compared with Q3. Recent business activity indicators for both industry sectors have increased and are above the 50-point benchmark, indicating that more firms reported improvements than declines in business performance.
“Strong Q4 performance and recent federal interest rate cuts have bolstered confidence among industry professionals as we enter the new year,” said Marine Sargsyan, Houzz staff economist. “With this solid foundation, construction firms are expressing the most positive sentiment we’ve seen for the sector in two and a half years. Confidence levels also remain high among architects and interior designers as new committed projects continue to reinforce demand expectations, though optimism among this sector has softened slightly.”
Woodworking Network provided some insight into the recent report, with findings for the Q1 2025 Construction Sector Barometer as following:
- The Expected Business Activity Indicator for construction businesses related to project inquiries and newly committed projects increased three points to 65 for Q1.. This marks the highest reading since Q3 2022. Compared with Q4 2024, Q1 2025 expectations for project inquiries increased 10 points to 69, while new committed projects decreased 2 points to 62. The index is above 50 points suggesting businesses expect Q1 2025 performance to be better than Q4 2024. Both build-only and design-build remodelers expect an uptick in Q1 2025 business activity, with the indicators reaching 65 and 66, respectively.
- The Project Backlog Indicator is 5.8 weeks at the beginning of Q1 2025, which is 0.9 weeks shorter than a year ago. Build-only remodelers report a decrease of 1.4 weeks to 5.0 weeks, while design-build remodelers report a 0.4-week decrease in wait times at 6.7 weeks.
- The Recent Business Activity Indicator related to project inquiries and newly committed projects increased to 54 in Q4 2024, up 7 points from the previous quarter, indicating improvement in Q4 business activity compared with Q3. This is driven by a 14-point increase in project inquiries to 60 in Q4, relative to the previous quarter. Newly committed projects remained stable at 48. Both groups reported a 7-point increase in recent business activity, bringing the indicators above 50 points. The recent business indicator reached 53 for build-only remodelers and 55 for design-build remodelers in Q4.
