Industry Research
Home Professionals Close 2025 With Varying Levels of Optimism
Construction and design firms’ recent business activity diverged, the Q4 2025 U.S. Houzz Renovation Barometer indicates
Construction professionals report renewed optimism in the final quarter of 2025 following a strong rebound in business activity in the third quarter, according to the Q4 2025 U.S. Houzz Renovation Barometer. Meanwhile, businesses in the architecture and design services sector remain cautiously optimistic despite a modest slowdown.
The recently released Barometer report provides timely insights into the residential renovation industry, including expectations, project backlogs and recent activity among businesses in the construction sector and the architectural and design services sector.
“Construction professionals are closing the year with renewed confidence, supported by a surge in project activity in the third quarter and recent interest rate cuts,” Houzz staff economist Marine Sargsyan says. “While backlogs have come down from record highs, firms continue to manage steady pipelines and make adjustments to maintain profitability. In contrast, design professionals remain more cautious, signaling that while homeowner interest persists, project planning cycles may lengthen as clients weigh broader economic factors heading into 2026.”
The recently released Barometer report provides timely insights into the residential renovation industry, including expectations, project backlogs and recent activity among businesses in the construction sector and the architectural and design services sector.
“Construction professionals are closing the year with renewed confidence, supported by a surge in project activity in the third quarter and recent interest rate cuts,” Houzz staff economist Marine Sargsyan says. “While backlogs have come down from record highs, firms continue to manage steady pipelines and make adjustments to maintain profitability. In contrast, design professionals remain more cautious, signaling that while homeowner interest persists, project planning cycles may lengthen as clients weigh broader economic factors heading into 2026.”
A score higher than 50 indicates that more firms reported an increase in their business expectations than reported a decrease.
Construction Firms
1. Business activity outlook improved. In the construction sector, the Expected Business Activity Indicator, related to project inquiries and new committed projects, increased 8 points, to 66 (from 58 for Q3 2025). This was largely driven by a 12-point increase in expectations for new committed projects, to 64 (from 52 for Q3). Expectations for project inquiries increased 3 points, to 67 (from 64 for Q3).
The indicator now stands at 66 for both build-only remodelers and design-build firms, which is an increase of 8 points each (from 58 for Q3). This score above 50 suggests that more businesses in both groups anticipate improved business activity in Q4 compared with Q3.
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.
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Construction Firms
1. Business activity outlook improved. In the construction sector, the Expected Business Activity Indicator, related to project inquiries and new committed projects, increased 8 points, to 66 (from 58 for Q3 2025). This was largely driven by a 12-point increase in expectations for new committed projects, to 64 (from 52 for Q3). Expectations for project inquiries increased 3 points, to 67 (from 64 for Q3).
The indicator now stands at 66 for both build-only remodelers and design-build firms, which is an increase of 8 points each (from 58 for Q3). This score above 50 suggests that more businesses in both groups anticipate improved business activity in Q4 compared with Q3.
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.
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2. Project backlogs are shorter compared with last year. At the start of Q4 2025, the average backlog across the construction sector was 5.4 weeks nationally. That’s down 5.1 weeks compared with the backlog in the fourth quarter of 2024, when it was 10.5 weeks.
Looking at it by reporting group, the average wait times are 4.4 weeks for build-only firms (3.9 weeks shorter than a year ago, when it was 8.3 weeks) and 6.3 weeks for design-build firms (6.5 weeks shorter than a year ago, when it was 12.8 weeks).
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.
Looking at it by reporting group, the average wait times are 4.4 weeks for build-only firms (3.9 weeks shorter than a year ago, when it was 8.3 weeks) and 6.3 weeks for design-build firms (6.5 weeks shorter than a year ago, when it was 12.8 weeks).
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.
Geographically, backlogs for the construction sector vary significantly, from 3.4 weeks in the Mountain division (Arizona, New Mexico, Wyoming, Nevada, Colorado, Utah, Idaho and Montana) to 7.1 weeks in the New England division (Maine, Massachusetts, Connecticut, New Hampshire, Rhode Island and Vermont).
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 increased. The Recent Business Activity Indicator, which is related to project inquiries and new committed projects, increased 17 points, to 55, for the construction sector in Q3 (from 38 in Q2). This was driven by a significant 20-point increase in project inquiries, to 62 (from 42 in Q2), and a 13-point increase in new committed projects, to 48 (from 35 in Q2).
The indicator is now above the 50-point line for both reporting groups, as more businesses report increases in business activity rather than declines compared with Q2. Build-only firms saw a 21-point increase in recent business activity in Q3, to 56 (from 35 in Q2). Design-build firms reported a 12-point increase, to 54 (from 42 in Q2).
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.
3. Recent business activity increased. The Recent Business Activity Indicator, which is related to project inquiries and new committed projects, increased 17 points, to 55, for the construction sector in Q3 (from 38 in Q2). This was driven by a significant 20-point increase in project inquiries, to 62 (from 42 in Q2), and a 13-point increase in new committed projects, to 48 (from 35 in Q2).
The indicator is now above the 50-point line for both reporting groups, as more businesses report increases in business activity rather than declines compared with Q2. Build-only firms saw a 21-point increase in recent business activity in Q3, to 56 (from 35 in Q2). Design-build firms reported a 12-point increase, to 54 (from 42 in Q2).
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.
A score higher than 50 indicates that more firms reported an increase in their business expectations than reported a decrease.
Architectural and Design Firms
1. Business activity expectations increased. In the architectural and design services sector, the Expected Business Activity Indicator rose 1 point, to 59 (from 58 for Q3). This increase comes after three consecutive quarterly declines in that overall indicator, though it remains below the historic average for the subsector. The 1-point bump was driven by a 2-point increase in committed projects, to 60 (from 58 for Q3). Project inquiries were stable at 58 points.
Taking a closer look, the indicators inched up for both architects and interior designers in Q3. Architects’ expectations rose 1 point, to 58 (from 57 for Q3), and interior designers’ expectations rose 2 points, to 61 (from 59 for Q3).
Architectural and Design Firms
1. Business activity expectations increased. In the architectural and design services sector, the Expected Business Activity Indicator rose 1 point, to 59 (from 58 for Q3). This increase comes after three consecutive quarterly declines in that overall indicator, though it remains below the historic average for the subsector. The 1-point bump was driven by a 2-point increase in committed projects, to 60 (from 58 for Q3). Project inquiries were stable at 58 points.
Taking a closer look, the indicators inched up for both architects and interior designers in Q3. Architects’ expectations rose 1 point, to 58 (from 57 for Q3), and interior designers’ expectations rose 2 points, to 61 (from 59 for Q3).
2. Project backlogs are shorter compared with last year. Architectural and design services firms have seen a small decrease in wait times. The Project Backlog Indicator was 5.5 weeks at the beginning of Q4 — 0.8 weeks shorter than the average wait time a year ago, when it was 6.3 weeks.
Architects reported a 2-week decrease in wait times, to 5.8 weeks, compared with Q4 2024, when it was 7.8 weeks. Interior designers reported a wait time of 4.9 weeks — an increase of 1 week compared with a year ago, when it was 3.9 weeks.
Architects reported a 2-week decrease in wait times, to 5.8 weeks, compared with Q4 2024, when it was 7.8 weeks. Interior designers reported a wait time of 4.9 weeks — an increase of 1 week compared with a year ago, when it was 3.9 weeks.
Backlogs in the architectural and design services sector also vary by region.
Businesses in the Pacific division (Alaska, California, Washington, Oregon and Hawaii) reported the shortest average backlog, at 4.3 weeks. The East North Central division (Indiana, Michigan, Wisconsin, Illinois and Ohio) reported the longest, at 6.6 weeks.
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Businesses in the Pacific division (Alaska, California, Washington, Oregon and Hawaii) reported the shortest average backlog, at 4.3 weeks. The East North Central division (Indiana, Michigan, Wisconsin, Illinois and Ohio) reported the longest, at 6.6 weeks.
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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 decreased. The Recent Business Activity Indicator, related to project inquiries and new committed projects, for the architectural and design services sector was 43 in Q3 2025 — a 2-point drop from Q2, when it was 45. This is attributed to a decline in both project inquiries, to 43 (from 46 in Q2) and new committed projects, to 42 (from 44 in Q2).
The Recent Business Activity Indicator is down 6 points for architects, to 39 (from 45 in Q2), and up 3 points for interior designers, to 48 (from 45 for Q2). Though subsector trends diverged, the overall indicator is below the 50-point line, indicating more firms reported declines than increases in business activity.
3. Recent business activity decreased. The Recent Business Activity Indicator, related to project inquiries and new committed projects, for the architectural and design services sector was 43 in Q3 2025 — a 2-point drop from Q2, when it was 45. This is attributed to a decline in both project inquiries, to 43 (from 46 in Q2) and new committed projects, to 42 (from 44 in Q2).
The Recent Business Activity Indicator is down 6 points for architects, to 39 (from 45 in Q2), and up 3 points for interior designers, to 48 (from 45 for Q2). Though subsector trends diverged, the overall indicator is below the 50-point line, indicating more firms reported declines than increases in business activity.
The Houzz Renovation Barometer is based on a quarterly online survey sent to a national panel of U.S. businesses with online profiles 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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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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