Companies across the nation’s residential renovation and design sectors have higher expectations for business performance in 2024 than they did at the same time last year, with forecasts projecting improved demand despite rising costs for labor, products, and materials.
That’s the key finding of the newly released 2024 Houzz U.S. State of the Industry, which provides an outlook for the current year based on data reported by more than 2,150 professionals in the Houzz community for residential renovation and/or design.

According to the Palo Alto, Calif.-based online resource for home remodeling and design, more than 3 in 5 of the industry professionals surveyed anticipate that 2024 will be a “good” or a “very good” year – a forecast that follows a drop in revenue across the industry in 2023.

“Home industry professionals have greater optimism heading into 2024,” said Marine Sargsyan, staff economist for Houzz. “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.”

With positive signs that inflation is easing, and interest rates are stabilizing, surveyed renovation and design pros anticipate an increase in the demand for their services in 2024, Sargsyan noted, adding that many of those surveyed “adopted new processes and became more selective with the type of projects they’ll take on, making their businesses more resilient.” Strategies included bringing in large- budget projects, adjusting pricing structures, and offering new products and services, Sargsyan said.

Other highlights of the Houzz report:
 Improved demand for services expected: More than half of businesses across industry groups anticipate heightened demand for their services, which is more than double those expecting improvements in the demand for their services at the beginning of last year. 
 Labor availability worsens as costs continue to rise: Ongoing labor shortages are a persistent challenge, with expectations for rising labor costs in 2024 are prevalent across the industry. 
 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. However, an even larger share of businesses across the industry expect costs to rise than was expected 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. But despite the revenue declines, industry pros were generally able to retain their profits.