Growing from adversity: Home industry pros predict 2024 rebound

PALO ALTO, Calif. —Businesses across the housing and home renovation industry say that they expect revenue to rise this year, even with uncertain economic conditions and continued high costs for goods and labor taken into consideration.

The findings, released in Houzz Inc’s “2024 State of the Industry report,” point to increasing demand and better availability of materials as the main drivers of expected growth.

A greater number of firms across all seven key industry groups are reporting positive expectations for this year compared to 2023. Between 61% and 71% of firms anticipate a good or very good year, up from 50% to 56% in 2023.

Among the different sectors, interior designers are the most optimistic, with over 70% expecting a good or very good year, followed by design-build firms and general contractors at 66% and 65% respectively.

Construction and renovation firms are the least optimistic, but still reported an overall positive outlook, with 61% expecting either a very good or good year. Around a quarter of surveyed businesses have neutral expectations for 2024, and only a small percentage expect a poor or very poor year.

Following a drop in 2023, cash flow expectations are strong across the industry for the new year, with interior design and construction firms being the most bullish on both the revenue and profit fronts.

Another bright spot that companies see on the horizon is a better availability of raw materials. In 2024, more companies anticipate product availability to improve rather than worsen, with interior designers leading in optimism at 47%, followed by design-build firms at 44%. Firms expect that these goods will come at a higher price, with a significant majority of businesses expecting costs to rise compared to the previous year, ranging from 43% to 68% in 2024, in contrast to 25% to 43% in 2023.

Firms expect continued difficulty finding workers, along with the associated higher cost of labor, but hiring remains generally strong.  In 2024, more businesses hired additional employees compared to those who reduced their workforce last year.

Specialty building and renovation firms, along with general contractors, remodelers, and builders, led the hiring increases at 20% and 19% respectively. Architects and interior designers had more modest increases in hiring, with a respective 12% and 10% of firms expanding their teams.

Houzz staff economist Marine Sargsyan says that cooling inflation and an expected levelling off in interest rates are key drivers of the expected growth.

“Home industry professionals… 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,” Sargsyan said.

She added that the tough times seem to have toughened the industry, noting that after a difficult 2023, “many pros adopted new processes and became more selective with the types of projects they’ll take on, making their businesses more resilient.”

The 2024 Houzz U.S. State of the Industry survey solicited responses from 2,150 companies between December 17, 2023, and January 12, 2024.

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