“Residential construction and design service professionals large and small have sustained a remarkable multi-year run with upper-single to double-digit revenue growth,” said Nino Sitchinava, Houzz principal economist. “Based on qualitative feedback, the recent deceleration in growth of construction services is likely a function of capacity constraints due to labor shortage, rather than a contracting demand. That said, it is clear that the remodeler’s mood with respect to the economy is quickly changing and clouding their business outlook.”
2019 U.S. State of the Industry: Major Findings
- Optimism prevails for 2019: More than half of residential renovation and design companies cite a positive outlook for 2019 (58 to 80 percent), although this is less than last year (71 to 88 percent). The majority of companies among six of the seven industry groups expect profits to increase in 2019 (63 to 70 percent) and revenue growth in the upper single digits (eight to nine percent).
- Confidence in the national economy wavers: While companies maintain a positive outlook on the demand for their services in 2019, they are more likely to expect the national economy to deteriorate over the coming year (35 to 61 percent) than improve (11 to 18 percent).
- Hiring continues amidst tight labor market: One-fifth of design-related and over a third of construction-related industries plan to hire in 2019, though companies anticipate challenges to labor availability and costs in the year ahead.
- Construction sector faces rising costs: In 2018, firms across sectors experienced widespread challenges in the rising costs of doing business, with the construction sector reporting the greatest impact (76 to 81 percent). At least half of remodeling and design companies expect the costs of doing business to increase in 2019 (48 to 68 percent).
- Revenue growth positive despite deceleration: While average annual growth remained positive in 2018, five of the seven industry groups experienced a notable deceleration in average annual growth rates (five to eight percent), compared to 2017 (eight to 11 percent). These trends are consistent among businesses of all sizes. That said, over half of companies feel that 2018 revenues met or exceeded their expectations (58 to 65 percent).
The full 2019 Houzz U.S. State of the Industry report can be found here.
* The Houzz U.S. State of the Industry was conducted among home renovation firms in the Houzz U.S. community that offer services related primarily to residential renovation and/or design. Companies were grouped into seven industry sectors including, architects, interior designers, general contractors and remodelers, design-build firms, building and renovation specialty firms, landscape and outdoor specialty firms, and decorating specialty firms. The study was fielded from December 10, 2018 to January 10, 2019. N=4,780.
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