Survey also shows pros prioritizing client communication and new recruitment strategies to address competition and labor shortages
Houzz Inc., a leading AI-driven, all-in-one software for construction and design, has released its Q2 2026 U.S. Houzz Pro Industry Barometer.* The report finds that while recent business activity softened across both construction and design sectors in the first quarter, professionals maintain a moderate outlook for the spring.
Construction firms are signaling a rebound driven by improved expectations for new committed projects, while architecture and design firms (hereafter referred to as “design”) have a favorable perspective despite declines in recent activity. Expectations vary somewhat by business type, particularly in how broadly optimism is shared.
In the construction sector, design-build firms anticipate a significant surge in activity, while build-only remodelers expect more modest growth. Within the design sector, interior designers report an increase in sentiment, whereas architects’ expectations have leveled off compared to the previous quarter.
“After recent activity slowed in the first quarter compared with the end of 2025, construction and design pros are entering Q2 with cautious optimism, particularly in construction, where expectations for new projects are showing early signs of a rebound,” said Marine Sargsyan, Head of Economic Research at Houzz. “At the same time, persistent cost pressures and client hesitation are reshaping how firms compete. We’re seeing pros adapt in real time with construction firms investing in workforce development and more flexible pricing, while design professionals are doubling down on client experience and branding.”
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 (0 to 100) for each component are seasonally adjusted, with index values over 50 indicating that a greater proportion of firms reported quarter-over-quarter increases than those reporting decreases.
Top business concerns
- Rising costs and macroeconomic uncertainty are top of mind for professionals as they enter the second quarter. Nearly half of construction and design firms (49% and 45%, respectively) cite the increasing cost of products and materials as a primary concern.
- Broader economic factors are also weighing on the industry, particularly for design professionals, with 3 in 10 reporting concerns over geopolitical uncertainty and tariffs (30% each, compared with 23% and 17% respectively for construction firms).
- Client hesitation remains a hurdle, with more than a quarter of pros across both sectors (27% for construction and 30% for design) reporting that homeowners are delaying project starts.
- In the construction sector, more than two-thirds of businesses face skilled labor shortages (67%).
Strategies for competition and talent acquisition
Construction and design firms are actively evolving their operations to remain competitive. When asked about changes made in the last three months due to increased competition, a majority of construction pros (60%) and nearly half of design pros (45%) identified improved client communication as their primary strategy. Construction businesses are also more likely to use financial levers to win projects, with 42% adjusting pricing or offering promotions, compared with just 19% of design firms.
To future-proof their workforce, firms are also evolving their recruitment strategies. When asked how they are appealing to younger talent, more than half of construction firms (57%) reported offering on-the-job training, while design firms are more likely to lean into academic partnerships (26%). Both sectors are heavily leveraging social media for recruiting (35% of construction and 36% of design firms) and are increasingly highlighting their use of advanced technology (10% of construction vs. 16% of design firms), such as AI and project management software like Houzz Pro, to attract tech-savvy candidates.
Q2 2026 Construction Sector Barometer
The Expected Business Activity Indicator for construction businesses related to project inquiries and new committed projects increased by 3 points to 58 for Q2 2026 compared to Q1. This was driven by gains in expectations for new committed projects, which rose to 59 (up 6 points from Q1 2026), while project inquiries held steady at 57 (unchanged from Q1 2026).
Similarly, while both build-only remodelers and design-build firms anticipate improved Q2 business activity compared with Q1, with the indicator at 50 and 66, respectively, trends diverge considerably across pro types. The expected business activity indicator declined by 5 points for build-only remodelers (from 55) and increased by 10 points for design-build firms (from 56).
Overall, the Project Backlog Indicator declined compared with the same time last year: 5.6 weeks at the start of Q2 2026 (down 0.8 weeks from 6.4 weeks in Q2 2025). Build-only remodelers report a 4.6-week backlog (down 0.2 weeks from 4.8 weeks), while design-build remodelers report a 6.7-week backlog (down 1.3 weeks from 8.0 weeks).
The Recent Business Activity Indicator related to project inquiries and new committed projects declined to 48 in Q1 2026 (from 51 in Q4 2025). Project inquiries show some recovery (up 2 points to 51). Meanwhile, new committed projects fell 7 points to 45 (from 52). The recent business activity indicator declined to 50 for build-only remodelers (from 59) and increased to 46 for design-build remodelers (from 43) in Q1 2026.
Q2 2026 Architectural and Design Services Sector Barometer
The Expected Business Activity Indicator related to project inquiries and new committed projects decreased to 60 for Q2 2026 (down 1 point from 61 in Q1 2026) for the design sector. This reflects a slight decline in expectations for project inquiries to 60 (down from 62), while expectations for new committed projects edged up to 61 (from 60). Expectations for Q2 declined to 58 for architects (down from 61), while increasing to 65 for interior designers (up from 61).
The Project Backlog Indicator dropped significantly to 4.0 weeks at the start of Q2 2026, 1.7 weeks shorter than a year ago (from 5.7 weeks in Q2 2025). This decline was driven by the backlog for architects, which fell to 4.0 weeks (down 2.3 weeks from 6.3 weeks). Interior designers also reported a decline to 4.0 weeks (down 0.8 weeks from 4.8 weeks in Q2 2025).
The Recent Business Activity Indicator related to project inquiries and new committed projects declined to 48 in Q1 2026 (from 54 in Q4 2025). This was driven by a decrease in project inquiries to 45 (down 9 points from 54), while new committed projects edged down to 52 (from 53). Architects reported a decline in recent business activity, with the indicator dropping to 45 (from 55), while interior designers reported an increase to 53 (from 50).
About Houzz
Houzz is a leading AI-driven platform for construction and design that’s used by more than 3 million construction and design industry professionals and over 70 million homeowners and home design enthusiasts around the world. 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. Using Houzz, people can find ideas and inspiration, hire professionals and buy products. Houzz and Houzz Pro are available on the web and as top-rated mobile apps.
