Professionals anticipate improved business expectations while adapting strategies to address persistent market pressures and protect profitability
Houzz Inc.’s Q3 2026 U.S. Houzz Pro Industry Barometer finds that construction and design professionals are entering Q3 with optimism despite ongoing economic pressures and mixed quarterly results. Construction firms expect business activity to improve, driven by stronger project inquiries—even after the recent business activity indicator remained below the 50-point threshold in Q2. Meanwhile, design firms are entering the quarter with significant momentum fueled by gains in both project inquiries and new committed projects.
“Construction and design pros are heading into Q3 with renewed confidence as expectations for improved business activity broaden across the industry, with the design sector seeing especially strong momentum,” said Marine Sargsyan, Head of Economic Research at Houzz. “That optimism comes alongside persistent market pressures. Pros are navigating a combination of cost, labor and client-related concerns—and they are responding strategically to protect profitability.”
The challenges respondents noted most are:
- Rising product and material costs (40% construction, 48% design)
- Client financial uncertainty (33% construction, 49% design)
- Increased costs of labor (28% construction, 20% design)
- Higher fuel or transportation costs (28% construction, 20% design)
To navigate these challenges, pros are adapting business strategies. Raising prices or rates was the most common response (40% construction, 35% design), followed by becoming more selective about project size and budgets (34% construction, 32% design), and adjusting project timelines or phases (29% construction, 27% design). Construction firms are also narrowing their geographic focus, with 1 in 5 concentrating on projects closer to their home office (20%) or reducing overall project volume (19%). Meanwhile, design firms are prioritizing relationships by focusing on repeat clients and referrals (25%).
Looking ahead, the vast majority of construction and design firms anticipate ongoing pressures in the coming quarter (92% construction and 90% design). Maintaining profitability remains a key pressure point across both sectors as pros continue to navigate elevated costs, labor pressures, and client-related constraints.
The quarterly U.S. Houzz Pro Industry Barometer provides timely insights into the residential construction and design industry, including expectations, project backlogs, and recent activity among businesses in the U.S. construction and architectural and design services sectors. Scores for each component are computed as a seasonally adjusted diffusion indices on a scale of 0 to 100, with index values over 50 indicating that a greater proportion of firms reported quarter-over-quarter increases than those reporting decreases. The Q3 2026 Barometer was fielded July 2 through July 8, 2026, and garnered responses from nearly 1,000 firms in the construction and design industry on Houzz.
Q3 2026 Construction Sector Barometer
The Expected Business Activity Indicator for construction businesses increased by 3 points to 61 for Q3 2026 when compared to Q2. This was driven primarily by greater expectations for project inquiries, which rose 4 points to 61. New committed projects also inched up to 60 (up 1 point from Q2 2026).
Trends diverged across pro types: build-only remodelers anticipate improved Q3 business activity, gaining 9 points from Q2 to reach 59; while design-build firms expect a modest pullback, declining from 66 in Q2 to 63 in Q3. Both indicators remain above 50, signaling that more firms expect business activity to improve than decline.
Overall, the Project Backlog Indicator was steady compared with the same time last year: 6.1 weeks at the start of Q3 2026. Build-only remodelers report a 6-week backlog (down from 6.4 weeks in Q2), while design-build remodelers report a 6.2-week backlog (up from 5.8 weeks).
The Recent Business Activity Indicator declined modestly to 47 in Q2 2026 (from 48 in Q1 2026). Project inquiries also softened slightly (dipping 1 point to 50), while new committed projects held steady at 45. The recent business activity indicator declined to 47 for build-only remodelers (from 50) but increased to 47 for design-build remodelers (from 46) in Q2 2026.
Q3 2026 Architectural and Design Services Sector Barometer
The Expected Business Activity Indicator for the design sector increased to 68 for Q3 2026 (up from 60 in Q2 2026). The improvement reflects expected gains in both project inquiries, which rose to 67 (from 60), and new committed projects, which increased to 69 (from 61). Expectations for Q3 increased sharply among architects to 71 (from 58), while easing slightly among interior designers to 63 (from 65).
The Project Backlog Indicator dropped to 4.7 weeks at the start of Q3 2026, 1.2 weeks shorter than a year ago. This decline was driven by the backlog for architects, which fell to 5.1 weeks (down from 6.7 weeks in Q3 2025). Meanwhile, interior designers also reported a decline to 3.9 weeks (down from 4.4 weeks last year).
The Recent Business Activity Indicator increased significantly to 62 in Q2 2026 (up from 48 in Q1 2026). This was driven by a steep increase in project inquiries to 62 (up from 45), while new committed projects also improved to 63 (from 52). Architects reported particularly strong gains, with the indicator climbing to 67 (from 45), while interior designers reported a more modest increase to 55 (from 53).
Detailed methodology and underlying quarterly indices for the construction sector and the architectural and design services sector, and other information on market conditions, can be found at houzz.com/research.
About Houzz
Houzz, a leading AI-driven platform for construction and design, empowers industry professionals and homeowners with the tools they need to make every project a success. The company’s cloud-based project management and design software, Houzz Pro, helps pros win projects, collaborate with clients and teams, and run their businesses efficiently and profitably. Houzz Pro also provides pros and their clients with 24/7 access to project information, 3D visualizations, and financial tools. The Houzz platform is used by more than 3 million construction and design industry professionals and over 70 million homeowners and home design enthusiasts around the world. Using Houzz, people can find ideas and inspiration, hire professionals and get advice for their projects. Houzz and Houzz Pro are available on the web and as top-rated mobile apps.
