Every quarter, we share insights from the Houzz Renovation Barometer to help you stay abreast of industry trends and make better business decisions. The Barometer provides insights on business expectations, project backlogs and recent activity among businesses in the U.S. construction and architectural and design services sectors, related to residential projects. Here are the findings for the beginning of the first quarter of 2025, including data based on Q4 2024 results, specifically for two industry groups: interior designers and architects.
Expected Business Activity Dips Slightly
The Expected Business Activity Indicator, which focuses on project inquiries and new committed projects, declined for the two sectors combined, from 71 for Q4 2024 to 68 for Q1 2025. Breaking it down, expectations for project inquiries declined by 7 points quarter over quarter, from 73 to 66, while expectations for committed projects remained unchanged, at 69 points.
However, it’s important to note two things. First, the scores are still well above 50, indicating overall positive sentiment about business activity. (A score greater than 50 indicates that more businesses expect quarter-over-quarter increases rather than decreases in business activity.) And second, the overall decrease is driven by architects, whose Expected Business Activity Indicator decreased by 12 points. In contrast, the indicator rose for interior designers, from 61 for Q4 2024 to 72 for Q1 2025.
“Confidence levels remain high among architects and interior designers as new committed projects continue to reinforce demand expectations, though optimism among architects has softened slightly,” Houzz staff economist Marine Sargsyan says.
Factoring In Potential Tariff Hikes
Tariffs, which are taxes on imported goods and services, aren’t new, but concerns exist among interior designers that they may be increased. Higher tariffs could mean higher overall costs, which designers would have to either absorb or pass on to clients. Even if designers were to source only American-made fixtures and furnishings, tariffs on construction materials could increase project costs, so designers might have to rethink their designs to stay within the client’s budget, and/or source new products.
Over time, high tariffs can slow growth, reshape market strategies and influence broader economic sentiment as businesses adapt to more expensive products and materials.
Concern over tariffs may help explain why 79% of architects and interior designers cited having economic uncertainty. The No. 2 concern is clients’ budget constraints, cited by 51%.
Recent Business Activity Upswing Continues
The Recent Business Activity Indicator, which is related to project inquiries and new committed projects, increased from 54 in Q3 2024 to 58 in Q4 2024 for interior designers and architects combined. This increase is attributed to an uptick in both project inquiries and new committed projects (up by 4 points each quarter over quarter, to 56 and 59, respectively.
Moreover, the indicator for the architectural and design services sector has been higher than 50 for six consecutive quarters, suggesting that business performance has been generally improving for architects and interior designers over the past year and a half. (A score greater than 50 indicates that more businesses saw quarter-over-quarter increases rather than decreases in business activity.)
However, business activity was markedly different for the two groups individually. The indicator is up by only 1 point for architects, and now stands at 61. In contrast, it’s up by 10 points for interior designers, and now stands at 53.
Longer Wait Times for Project Kickoffs
The Project Backlog Indicator is 7.3 weeks nationally at the start of Q1 2025 — 2.1 weeks longer than it was a year ago, in Q1 2024. Breaking it down, architects reported that their wait times were up by 2.7 weeks year over year, while interior designers reported an increase of 1 week in the same period.
However, backlogs for the architectural and design services sector vary widely by region. They range from 3.1 weeks in the West North Central division (including Missouri, South Dakota, North Dakota, Iowa, Minnesota, Kansas and Nebraska) to 8.4 weeks in the East South Central division (including Alabama, Tennessee, Kentucky and Mississippi).
More:
Read more about the Renovation Barometer for architects and designers in Q1
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