Industry Research
Pros Adjust Rates and Vet Projects to Protect Profit Margins
Firms are leaning on price adjustments and strict project filtering, the Q3 2026 U.S. Houzz Pro Industry Barometer shows
The Q3 2026 U.S. Houzz Pro Industry Barometer survey of nearly 1,000 residential construction, architecture and design firms reveals a wave of renewed confidence heading into the third quarter of 2026. Construction firms expect business activity to rise over the next quarter due to an uptick in project inquiries, despite a slight dip in recent months. And the design sector enters the quarter with significant momentum, fueled by gains in both inquiries and new committed projects.
Their optimism comes with a reality check, however. To protect against higher costs, labor shortages and cautious homeowners, businesses are focusing on three key areas: managing immediate overhead spikes, being choosier about the jobs they take, and changing where and how they look for work. Here’s a closer look at how construction and design professionals are navigating the current landscape.
Their optimism comes with a reality check, however. To protect against higher costs, labor shortages and cautious homeowners, businesses are focusing on three key areas: managing immediate overhead spikes, being choosier about the jobs they take, and changing where and how they look for work. Here’s a closer look at how construction and design professionals are navigating the current landscape.
2. Firms Adjust Rates and Project Sizes to Shield Profits
Faced with rising expenses, professionals are taking action to protect their bottom lines. The most widespread response across the industry has been simple pricing adjustments, with 40% of construction pros and 35% of design pros raising their prices or rates. Firms also are becoming highly intentional about:
Faced with rising expenses, professionals are taking action to protect their bottom lines. The most widespread response across the industry has been simple pricing adjustments, with 40% of construction pros and 35% of design pros raising their prices or rates. Firms also are becoming highly intentional about:
- Stricter project vetting. More than a third of construction firms (34%) and nearly a third of design firms (32%) are becoming much more selective about project sizes and budgets.
- Phased timelines. Spreading project schedules out or breaking work into distinct phases is a common tactic to keep projects moving without sacrificing profitability (29% construction, 27% design).
3. Pros Change Where and How They Work to Find Stability
As the two sectors look for stability, their business strategies are beginning to split. Construction firms are staying closer to home and limiting their workloads to keep overhead predictable. One in 5 construction businesses (20%) is narrowing its geographic focus to target projects closer to the main office, while nearly the same amount (19%) is intentionally cutting back on total project volume to ensure they can manage expenses.
Conversely, design firms are leaning into personal networks. Instead of changing their service territory, a quarter of design professionals (25%) are prioritizing profitability by heavily focusing on repeat clients and trusted referrals.
These varied approaches show a clear trend: While pros are optimistic about homeowner demand this summer, they are strictly refining how and where they work to keep their businesses financially resilient.
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As the two sectors look for stability, their business strategies are beginning to split. Construction firms are staying closer to home and limiting their workloads to keep overhead predictable. One in 5 construction businesses (20%) is narrowing its geographic focus to target projects closer to the main office, while nearly the same amount (19%) is intentionally cutting back on total project volume to ensure they can manage expenses.
Conversely, design firms are leaning into personal networks. Instead of changing their service territory, a quarter of design professionals (25%) are prioritizing profitability by heavily focusing on repeat clients and trusted referrals.
These varied approaches show a clear trend: While pros are optimistic about homeowner demand this summer, they are strictly refining how and where they work to keep their businesses financially resilient.
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
While the outlook for Q3 is positive, firms continue to battle a familiar mix of business obstacles. Price volatility remains a chief concern, heavily driven by product and material costs, which impact nearly half of design firms (48%) and a significant portion of construction businesses (40%). Other top challenges:
- Homeowner financial uncertainty. This is a major hurdle for both sectors, weighing particularly heavily on design professionals (33% construction, 49% design).
- Expensive labor. Higher workforce costs continue to squeeze project budgets (28% construction, 20% design).
- Fuel and transportation hikes. High travel and shipping costs remain a persistent headache across the board (28% construction, 20% design).
The vast majority of professionals expect these challenges to follow them into the next quarter, with 92% of construction firms and 90% of design firms bracing forongoing market pressures.
Pros Maintain Optimism Heading Into Q3 Despite Ongoing Pressures