Industry Research
Construction and Design Pros Enter 2026 With a Measured Outlook
Moderate optimism outweighs uncertainty as businesses plan for growth and margin protection
Construction and design professionals are heading into 2026 with a cautiously optimistic perspective, according to the Q1 2026 U.S. Houzz Pro Industry Barometer. Many firms anticipate stable demand and growth opportunities for the year, but ongoing cost pressures, labor constraints and broader economic uncertainties are prompting businesses to adjust strategies to protect margins.
A majority (56%) of firms in the construction sector are expecting a good to very good year, 28% are anticipating stable conditions, and 16% foresee weaker performance than in 2025. In the architectural and design services sector, half (50%) expect a strong year, 35% report a neutral outlook and 15% anticipate declines in business performance.
Construction firms’ expectations are more subdued for the first quarter of 2026 — after a softening in late 2025 — than for the year overall. Architecture and design firms are on a stronger footing in the first quarter of 2026, buoyed by increased business activity in the fourth quarter of 2025.
“Construction and design businesses are heading into 2026 with a measured but resilient outlook,” says Marine Sargsyan, head of economic research at Houzz. “While expectations for the broader national economy remain subdued, and cost and labor pressures persist, many firms anticipate stable demand for their projects. To drive revenue growth in 2026, businesses are adjusting their strategies by raising prices, prioritizing larger and higher-value projects and investing in employee productivity, reflecting broader industry interest around AI-enabled software tools such as Houzz Pro.”
A majority (56%) of firms in the construction sector are expecting a good to very good year, 28% are anticipating stable conditions, and 16% foresee weaker performance than in 2025. In the architectural and design services sector, half (50%) expect a strong year, 35% report a neutral outlook and 15% anticipate declines in business performance.
Construction firms’ expectations are more subdued for the first quarter of 2026 — after a softening in late 2025 — than for the year overall. Architecture and design firms are on a stronger footing in the first quarter of 2026, buoyed by increased business activity in the fourth quarter of 2025.
“Construction and design businesses are heading into 2026 with a measured but resilient outlook,” says Marine Sargsyan, head of economic research at Houzz. “While expectations for the broader national economy remain subdued, and cost and labor pressures persist, many firms anticipate stable demand for their projects. To drive revenue growth in 2026, businesses are adjusting their strategies by raising prices, prioritizing larger and higher-value projects and investing in employee productivity, reflecting broader industry interest around AI-enabled software tools such as Houzz Pro.”
2026 Outlook for the Construction and Design Sectors
Houzz asked construction and design pros about their expectations for the year across various market conditions. These graphs illustrate the overall moderate business outlook among those home improvement professionals. More than half of construction firms (56%) expect a good to very good year, while half of design pros (50%) have the same outlook.
A few other key findings stand out for 2026.
Improving demand. Nearly two-thirds of design firms expect improved demand in 2026 (62%), compared with 57% of construction firms.
Mixed economic expectations. More businesses expect local economic conditions to strengthen (38% construction, 43% design) than to worsen (29% construction, 26% design), while a larger share of pros anticipate the national economy will slow (43% construction, 51% design) rather than improve (30% construction, 32% design).
Ongoing labor constraints. More than one-third of construction firms (36%) and nearly one-third of design firms (30%) expect labor shortages to persist.
Rising costs. A majority of businesses expect product and material costs to increase (69% construction, 65% design).
But the survey revealed a few top strategies pros are planning to use to achieve revenue growth in 2026. These include pursuing larger-budget projects (71% construction, 64% design), increasing markup or margin (45% construction, 50% design) and improving employee productivity (32% construction, 30% design).
As businesses enter the first quarter of 2026, near-term expectations are more varied across the construction and design sectors.
Houzz asked construction and design pros about their expectations for the year across various market conditions. These graphs illustrate the overall moderate business outlook among those home improvement professionals. More than half of construction firms (56%) expect a good to very good year, while half of design pros (50%) have the same outlook.
A few other key findings stand out for 2026.
Improving demand. Nearly two-thirds of design firms expect improved demand in 2026 (62%), compared with 57% of construction firms.
Mixed economic expectations. More businesses expect local economic conditions to strengthen (38% construction, 43% design) than to worsen (29% construction, 26% design), while a larger share of pros anticipate the national economy will slow (43% construction, 51% design) rather than improve (30% construction, 32% design).
Ongoing labor constraints. More than one-third of construction firms (36%) and nearly one-third of design firms (30%) expect labor shortages to persist.
Rising costs. A majority of businesses expect product and material costs to increase (69% construction, 65% design).
But the survey revealed a few top strategies pros are planning to use to achieve revenue growth in 2026. These include pursuing larger-budget projects (71% construction, 64% design), increasing markup or margin (45% construction, 50% design) and improving employee productivity (32% construction, 30% design).
As businesses enter the first quarter of 2026, near-term expectations are more varied across the construction and design sectors.
A score higher than 50 indicates that more firms reported an increase in their business expectations than reported a decrease.
Construction Firms in Q1 2026
1. Business activity outlook declined. For the construction sector, the Expected Business Activity Indicator, related to project inquiries and new committed projects, decreased 11 points, to 55, in Q1 2026 (from 66 in Q4 2025). This quarter-to-quarter decline reflects lower expectations for project inquiries, down 10 points, to 57 (from 67 for Q4) and new committed projects, down 11 points, to 53 (from 64 for Q4). Both build-only remodelers and design-build firms report more modest optimism for Q1, with expected activity indicators at 55 for build-only remodelers and 56 for design-build firms, though both Q1 indicators are down 10 points compared with Q4.
The indicator is based on survey questions about whether businesses expect the number of project inquiries and new committed projects to increase, decrease or remain unchanged in the coming three months compared with the previous three months.
Construction Firms in Q1 2026
1. Business activity outlook declined. For the construction sector, the Expected Business Activity Indicator, related to project inquiries and new committed projects, decreased 11 points, to 55, in Q1 2026 (from 66 in Q4 2025). This quarter-to-quarter decline reflects lower expectations for project inquiries, down 10 points, to 57 (from 67 for Q4) and new committed projects, down 11 points, to 53 (from 64 for Q4). Both build-only remodelers and design-build firms report more modest optimism for Q1, with expected activity indicators at 55 for build-only remodelers and 56 for design-build firms, though both Q1 indicators are down 10 points compared with Q4.
The indicator is based on survey questions about whether businesses expect the number of project inquiries and new committed projects to increase, decrease or remain unchanged in the coming three months compared with the previous three months.
2. Project backlogs are largely consistent with last year. The Project Backlog Indicator for construction firms is 6.1 weeks nationally at the start of Q1 2026, up slightly from 5.8 weeks a year ago. Build-only remodelers report an average backlog of 5.5 weeks (up 0.5 week year over year), while design-build firms report 6.6 weeks (down 0.1 week).
The Project Backlog Indicator is based on survey questions that ask businesses to report wait times (in weeks) to start work on a midsize project. Scores are computed as average wait times without seasonal adjustment.
The Project Backlog Indicator is based on survey questions that ask businesses to report wait times (in weeks) to start work on a midsize project. Scores are computed as average wait times without seasonal adjustment.
A score higher than 50 indicates that more firms reported an increase in their recent business activity than reported a decrease.
3. Recent business activity showed mixed results. The Recent Business Activity Indicator, which is related to project inquiries and new committed projects, decreased to 51 in Q4 2025 (from 55 in Q3), driven by a 13-point decline in project inquiries, to 49 (from 62 for Q3). That was partially offset by a 3-point increase in new committed projects, to 52 (from 49 for Q3). Among subgroups, build-only remodelers reported stronger activity (59), while design-build firms saw slower results (43), reflecting a divergence within the sector.
The Recent Business Activity Indicator looks at actual activity over the previous three months. In contrast with the Expected Business Activity and Project Backlog indicators, which look forward in time, the Recent Business Activity Indicator looks back. It’s based on survey questions about whether businesses observed an increase, a decrease or no change in the actual number of project inquiries and new committed projects over the previous three months relative to the three months prior.
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3. Recent business activity showed mixed results. The Recent Business Activity Indicator, which is related to project inquiries and new committed projects, decreased to 51 in Q4 2025 (from 55 in Q3), driven by a 13-point decline in project inquiries, to 49 (from 62 for Q3). That was partially offset by a 3-point increase in new committed projects, to 52 (from 49 for Q3). Among subgroups, build-only remodelers reported stronger activity (59), while design-build firms saw slower results (43), reflecting a divergence within the sector.
The Recent Business Activity Indicator looks at actual activity over the previous three months. In contrast with the Expected Business Activity and Project Backlog indicators, which look forward in time, the Recent Business Activity Indicator looks back. It’s based on survey questions about whether businesses observed an increase, a decrease or no change in the actual number of project inquiries and new committed projects over the previous three months relative to the three months prior.
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A score higher than 50 indicates that more firms reported an increase in their business expectations than reported a decrease.
Architectural and Design Firms in Q1 2026
1. Business activity expectations increased slightly. The Expected Business Activity Indicator for the design sector rose 2 points, to 61 for Q1 2026 (from 59 for Q4), driven by a 4-point increase in project inquiries, to 62 (from 58 for Q4), while expectations for new committed projects remained stable at 60. Both architects and interior designers reported similar expectations, with indicators at 61 for each group.
Architectural and Design Firms in Q1 2026
1. Business activity expectations increased slightly. The Expected Business Activity Indicator for the design sector rose 2 points, to 61 for Q1 2026 (from 59 for Q4), driven by a 4-point increase in project inquiries, to 62 (from 58 for Q4), while expectations for new committed projects remained stable at 60. Both architects and interior designers reported similar expectations, with indicators at 61 for each group.
2. Project backlogs shortened significantly. The Project Backlog Indicator dropped to 4.5 weeks nationally, down 2.8 weeks from a year ago. This was driven by architects’ backlogs, which fell by half, to 4.5 weeks. Interior designers’ wait times remained largely unchanged at 4.5 weeks.
A score lower than 50 indicates that more firms reported a decrease in their recent business activity than reported an increase.
3. Recent business activity increased. The Recent Business Activity Indicator, related to project inquiries and new committed projects, jumped to 54 in Q4 2025 (from 43 in Q3), reflecting 11-point gains in both project inquiries, to 54 (from 43 for Q3) and new committed projects, to 53 (from 42 for Q3). Architects saw the largest increase, up 16 points, to 55 (from 39 for Q3), while interior designers rose 2 points, to 50 (from 48 for Q3). The overall indicator is above 50, meaning more design firms reported improvements than declines in activity compared with the previous quarter.
3. Recent business activity increased. The Recent Business Activity Indicator, related to project inquiries and new committed projects, jumped to 54 in Q4 2025 (from 43 in Q3), reflecting 11-point gains in both project inquiries, to 54 (from 43 for Q3) and new committed projects, to 53 (from 42 for Q3). Architects saw the largest increase, up 16 points, to 55 (from 39 for Q3), while interior designers rose 2 points, to 50 (from 48 for Q3). The overall indicator is above 50, meaning more design firms reported improvements than declines in activity compared with the previous quarter.
The U.S. Houzz Pro Industry Barometer is based on a quarterly online survey sent to a national panel of U.S. businesses with online profiles on Houzz. The Q1 2026 survey was fielded from Dec. 2-22, 2025, and garnered responses from more than 1,100 home improvement firms on Houzz.
If you’re a pro and would like to offer your insights on market conditions in your area by joining the Barometer panel, please click here.
Read more on this and past Barometer reports (including more detailed regional and subsector data).
Tell us: How does this report compare with your experiences? Please share in the Comments.
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If you’re a pro and would like to offer your insights on market conditions in your area by joining the Barometer panel, please click here.
Read more on this and past Barometer reports (including more detailed regional and subsector data).
Tell us: How does this report compare with your experiences? Please share in the Comments.
More for Pros on Houzz
Read more stories for pros
Browse millions of photos for inspiration
Learn about Houzz Pro software
Talk with your peers in the Houzz Pro Forum
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