Q3 of 2024 results from the Farnsworth Quarterly Contractor Index are now available to download.
Good news came last month in the form of the Federal Reserve signaling there will be a rate drop in September. We’ve also seen two months of increased consumer confidence. Though consumer confidence is still in what our analysts classify as “uncertain” territory, we may soon be coming out of a holding pattern for many homeowners that want to do a home improvement or remodel project but have yet to act on those desires.
The Farnsworth Contractor Index for Q3 suggest pros may also be seeing some increasing optimism with homeowners.
The supply and demand fundamentals continue to suggest that good times are ahead, and our Q3 Contractor Index illustrates how residential contractors are feeling that sense of optimism, which has also been a theme among manufacturers and suppliers through 2024 as well, albeit comparatively subdued when stacked against 2021 and 2022 optimism that the industry at large is still recalibrating from.
Here's what we are seeing:
1. Contractor Revenues Continue to Increase
Average revenue per project continues to increase with nearly 75% of pros reporting their project revenues are up compared to the prior 12 months. This may be in part due to labor and material costs but may also start reflecting increasing project size.
2. Contractors are Still Very Busy
And as we typically see in Q3, contractors are busier than they were in Q1 and Q2. Keep an eye on labor challenges among Pros as their workload increases not only due to seasonality, but due to the expected demand we anticipate next year. Manufacturers and suppliers will play a pivotal role in helping pros, at partially, solve for ongoing labor constraints.
3. Pros' Business Development Pipelines Remain Healthy
Lead volumes are at or above levels of Q3 last year.
And the quality of leads is at or above levels this time last year. These two factors are also leading to contractor optimism.
4. Contractor Confidence Continuing to Increase
Collectively, we see contractor confidence in Q3 inch slightly above their sentiment levels of Q2. Play close attention to the impact that interest rate drops have on homeowner confidence and affordability. As we move from “uncertain” to “more optimistic”, project demand will increase.
Top Takeaways for Go To Market Planning for 2025
Based on this quarters' reporting, we advise that you and your teams continue to become highly attuned to the budget sensitivity of the homeowner, because their budgets drive projects, which drives product sales and contractor activity levels.
Ultimately, market demand is still there for home improvement. Capturing that demand is a matter of the increasing competition that manufacturers, retailers, and Pros alike are facing now compared to the market environment in 2020-21.
For deeper industry insights on what this means specifically to your business and what to be paying attention to going forward regarding your customers, brand and products, simply schedule a consultation about commissioning custom market research.
And be sure to check out the full report of our most current Farnsworth Contractor Index below:
