Houzz State of the Industry Reveals Optimistic Outlook for 2020
Palo Alto, CA, February 20, 2020-Houzz released the 2020 Houzz U.S. State of the Industry, which reports that companies across all industry sectors have an optimistic outlook for 2020, following positive 2019 results.
The report provides an outlook on 2020 and review of 2019 performance for residential renovation and design businesses based on data reported by more than 3,000 professionals in the Houzz community.
“The findings from this year’s Houzz State of the Industry show continued momentum for the industry in its tenth year of expansion,” says Nino Sitchinava, Houzz principal economist. “While revenue growth slowed notably in 2019 and businesses expect continued growth deceleration into 2020, the positive outlook is prevalent across all industry groups and even improved when it comes to the health of the national economy. A major headwind in 2019 was rising costs of products and materials, linked by many businesses to increased tariff actions levied against popular construction products and materials. Elevated costs of products and labor continue to be the top challenges facing businesses going into 2020.”
2020 U.S. State of the Industry: major findings
* Businesses maintain a positive outlook: More than half of residential renovation and design companies on Houzz predict that 2020 will be a good or very good year (65% to 82%), reflecting a slight increase from expectations for 2019 a year ago (58% to 80%). While businesses across the seven industry groups expect 2020 revenue growth to range from 4.2% to 9.1%, five of the seven industry groups have lowered their 2020 growth expectations by 0.5 to 1.3 percentage points compared to their 2019 growth expectations.
* Improved expectations about the national economy: A positive outlook on the national economy is shared by a greater share of businesses (15% to 23%) compared to 2019 (11% to 18%), while expectations of an economic decline are significantly less prevalent (24% to 43%) than last year (35% to 61%). A majority of companies across all industry groups are optimistic that the demand for their services will increase in 2020 (58% to 69%) and most expect no change in local economies.
* Many expect to hire in 2020, yet fewer hired in 2019: Many companies continue to expect labor availability and costs to worsen in 2020. Still, more than a third of general contracting, design-build and building and renovation specialty companies (35% to 38%) and a fifth of architectural and interior design companies (20%, each) expect to hire in 2020. Interestingly, a smaller share of companies across all industry groups hired in 2019 compared with the previous year.
* Product and material costs are top challenge: Following widespread increases to the costs of doing business in 2019 (55% to 78%), product and material costs are cited as the most significant cost driver by six of seven industry groups (compared to five of seven groups in 2018). A large share of companies link the rising costs to a negative impact of tariffs on businesses in 2019 (23% to 34%), with architects and design-build companies most likely to cite a negative impact (34%, each). Businesses report a wide range of products and materials impacted by tariffs, from metal, steel and wood to cabinets, tile, and quartz.
* Revenue growth notably slowed in 2019: While revenue continued to increase in 2019, six out of seven industry groups experienced a notable deceleration in average revenue growth (3.1% to 6.1%) compared with 2018 (5.6% to 8.2 %). Building and renovation specialty companies are an exception, reporting average revenue growth on par with 2018 (6.1% in 2019 versus 6.5% in 2018).
The complete 2020 Houzz U.S. State of the Industry report can be found here.