Tempered Optimism for Designers in Q2 2024

Every quarter, we share insights from the Houzz Renovation Barometer to help you stay abreast of industry trends and make better business decisions. The Barometer provides insights on business expectations, project backlogs and recent activity among businesses in the U.S. construction and architectural and design services sectors, related to residential projects. Here are the findings for the second quarter of 2024 specifically for interior designers and architects.

Mixed Results for Recent Business Activity

The Recent Business Activity Indicator, which tracks project inquiries and new committed projects, has been above 50 for the third consecutive quarter, as of Q1 2024. (A score above 50 indicates that more businesses saw a quarter-over-quarter increase in business activity than saw a quarter-over-quarter decrease.) The score also was higher in those three quarters than in the three quarters preceding them, which means that designers and architects have seen improvements year over year.

Breaking down the data further by category, the overall indicator for architects’ business activity remained the same in Q1 2024 as in Q4 2023, at 54, and the score for project inquiries actually increased during the same time period, from 51 to 54. The indicator for committed new projects dropped from 57 to 55, but again, any score above 50 means that more businesses saw a quarter-over-quarter increase in business activity than saw a quarter-over-quarter decrease.

Designers, on the other hand, didn’t fare as well. The overall Recent Business Activity Indicator for this group dropped by 2 points between Q4 2023 and Q1 2024, from 54 to 52. The indicator for new committed projects dropped from 56 to 53 during the same time period, and the indicator for project inquiries stayed the same, at 51. All three indicators, however, remain above 50, indicating a favorable first quarter of this year.

“While promising economic conditions and improved product availability bolstered optimism among residential construction and design professionals at the start of the year, the anticipated uptick in activity did not fully materialize,” Houzz staff economist Marine Sargsyan says. “Pros across sectors maintain a hopeful outlook for increased business activity in the coming months. This is reflective of resilient local economies and aligns with positive consumer sentiment nationally.”

Backlog Times Decrease Overall

The average time for architects and interior designers combined to take on a new project is 5.6 weeks in Q2 2024. That’s 0.5 weeks lower than in Q2 2023, when it was  6.1 weeks. That’s due largely to a decrease in average project time in the architectural sector. Year over year, the average backlog time for architects decreased from 7.0 to 6.2 weeks, while for interior designers it increased — but by only less than one day, going from 4.6 to 4.7 weeks.

Expected Business Activity Declines

Although the Recent Business Activity Indicator was higher in Q1 2024 than in Q4 2023, it did not rise to the level that pros in both groups expected; the Expected Business Activity Indicator for Q1 2024 stood at 64. This likely is a contributing factor in the decline of 8 points in the Expected Business Activity Indicator for Q2; it now stands at 58.

While both architects and designers have lowered their expectations this quarter, the decline was more pronounced among architects, with the overall indicator dropping from 67 to 57 for that group. For designers, the score dropped by only 4 points, going from 63 to 59. However, as with the Recent Business Activity Indicator, keep in mind that a score over 50 means that more businesses expect a quarter-over-quarter increase in business activity than expect a decrease.

A detailed methodology, underlying quarterly indices and other information on market conditions can be found here. The Q2 2024 Barometer was fielded March 15 through April 4, 2024, and garnered responses from over 1,000 home improvement firms (including construction pros as well as architects and designers) on Houzz. n=1,054.

See more findings from the Q2 2024 Houzz Renovation Barometer

Find additional subsector and regional data for Q2 2024 here