Houzz Study Reveals Home Professionals Anticipate Revenue Increases in 2024 Following 2023 Dip
Rising costs of doing business continue to challenge pros, according to the 2024 Houzz U.S. State of the Industry
Palo Alto, Calif., February 22, 2024 – Houzz Inc., the leading platform for home remodeling and design, including the all-in-one software solution for industry professionals, today released the 2024 Houzz U.S. State of the Industry.* The report provides an outlook for 2024 and review of 2023 performance for residential renovation and design businesses based on data reported by more than 2,100 professionals in the Houzz community. Companies across industry sectors have higher expectations for business performance in 2024 than expectations at the same time last year, with more than 3 in 5 anticipating that 2024 will be a good or very good year (61% to 71% versus 50% to 56% in the same report a year ago). Pros forecast revenue growth along with improved demand for their services, despite rising costs of labor, products and materials. This follows the drop in actual revenue across the industry in 2023.
“Home industry professionals have greater optimism heading into 2024. They are expecting to turn the tide following a challenging year, where economic conditions, such as inflation and rising costs of labor and materials, resulted in fewer and smaller-scope projects,” said Marine Sargsyan, Houzz staff economist. “With positive signs that inflation is easing somewhat and interest rates are stabilizing, pros anticipate an increase in the demand for their services in 2024. Many pros adopted new processes and became more selective with the types of projects they’ll take on, making their businesses more resilient.”
Firms across the design and construction industry implemented a variety of strategies in response to the challenges they faced last year and now expect an average range of 3.3% to 8.9% annual revenue growth in 2024. Strategies include bringing in larger-budget projects, adjusting pricing structures, and offering new products and services.
2024 U.S. State of the Industry: Major Findings
Interior designers are the most bullish: Interior designers expect that 2024 will be a good or very good year (71%), followed by design-build firms and general contractors, remodelers and builders (66% and 65%, respectively).
Revenue growth estimates rebound for design and architecture: Companies across all industry sectors expect an increase in revenue and profits in 2024 following a challenging 2023 environment. Interior designers and architects return to more typical revenue growth expectations in 2024 (8.9% and 5.3%, respectively), following a cautious forecast at the beginning of 2023 (3.0% and 0.3%, respectively). Among construction professionals, building and renovation specialists have the highest anticipated revenue growth, followed by general contractors, remodelers and builders, and design-build firms (8.1%, 7.7% and 3.3%, respectively).
Improved demand for services expected: More than half of businesses across industry groups anticipate heightened demand for their services (54% to 62%), which is more than double those expecting improvements in the demand for their services at the beginning of last year (21% to 32%).
Labor availability worsens as costs continue to rise: Ongoing labor shortages are a persistent challenge, as predicted by 6 out of the 7 industry groups. Expectations for rising labor costs in 2024 are also prevalent across the industry, with a greater percentage of firms (38% to 58%) bracing for higher costs compared to the previous year (24% to 35%).
Product and material availability improves, at a higher cost: More companies across the industry expect product and material availability to improve than to worsen in 2024, with interior designers being the most optimistic (47%), followed by design-build firms (44%). However, an even larger share of businesses across the industry expect costs to rise than the previous year (43% to 68% in 2024, versus 25% to 43% in 2023).
Profits reported despite revenue deceleration: The residential design and construction industry experienced a deceleration in annual revenue growth in 2023, compared with the previous year. Among the seven industry groups, only interior designers and general contractors reported somewhat positive revenue growth (1.1% and 0.4%, respectively). Despite revenue declines, pros were able to retain their profits, with a greater proportion of firms across 6 of the 7 industry groups reporting profit increases over decreases. In the construction sector, more than 40% of businesses showed profit gains.
Construction sector leads in hiring: More businesses increased their number of employees than those reporting decreases in 2023, with a larger share of specialty building and renovation firms, and general contractors, remodelers and builders hiring (20% and 19%, respectively). Architects and interior designers observed more moderate hiring activity, with 12% and 10% of firms increasing their headcount, respectively.
The complete 2024 Houzz U.S. State of the Industry report can be found here.
There are more than 3 million home renovation and design professionals on Houzz, including interior designers, home builders, remodelers and architects. Houzz Pro provides industry professionals with a business management and marketing SaaS solution that helps them run their projects efficiently and profitably while delivering an outstanding client experience, including estimates, proposals, project management and more.
* The 2024 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, remodelers and builders; design-build firms; building and renovation specialty firms; landscape and outdoor specialty firms; and decorating specialty firms. The study was fielded from December 17, 2023, to January 12, 2024. N=2,150.
About Houzz
Houzz is the leading platform for home remodeling and design, providing an all-in-one software solution for industry professionals and tools for homeowners to update their homes from start to finish. Using Houzz, people can find ideas and inspiration, hire professionals, and shop for products. Houzz Pro (houzz.com/pro) provides home industry professionals with a business management and marketing SaaS solution that helps them to win projects, collaborate with clients and teams, and run their business 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. For more information, visit houzz.com. Houzz is a registered trademark of Houzz Inc. worldwide.