Houzz Inc. recently released the Q1 2026 U.S. Houzz Pro Industry Barometer. The findings show that a moderately positive outlook outweighs negative expectations for 2026 in the construction sector, where 56 percent anticipate a good to very good year, 28 percent expect business conditions to remain stable, and 16 percent anticipate weaker performance than last year. Sentiment among the design services sector (hereafter referred to as “design”) is more mixed, with half (50 percent) expecting a good to very good year, 35 percent reporting a neutral outlook, and the remaining 15 percent anticipating poorer business performance in 2026 versus 2025.
Looking at Q1, expectations are more subdued in the construction sector (55), following a 4-point decline in Q4 business activity (51) compared with Q3 2025. In contrast, design firms are more optimistic (61) as they closed out the year on a stronger note, with an 11-point increase in business activity (54) versus Q3 2025 (43), as more architects and designers reported gains in recent activity compared to those reporting declines.
Houzz asked construction and design pros about their outlook for 2026 and expectations across various market conditions. In addition to the overall moderate business outlook for the year mentioned above, expectations for 2026 include:
- Improving demand: Nearly two-thirds of design firms expect improved demand in 2026 (62 percent), compared with 57 percent of construction firms.
- Mixed economic expectations: More businesses expect local economic conditions to strengthen (38 percent construction, 43 percent design) than worsen (29 percent construction, 26 percent design), while a larger share of pros anticipate the national economy will slow (43 percent construction, 51 percent design) rather than improve (30 percent construction, 32 percent design).
- Ongoing labor constraints: More than one-third of construction firms and nearly one-third of design firms expect labor shortages to persist (36 percent and 30 percent, respectively).
- Rising costs: A majority of businesses expect product and material costs to increase (69 percent construction, 65 percent design).
- Top strategies to achieve revenue growth in 2026:
- Pursue larger-budget projects (71 percent, construction, 64 percent design)
- Increase markup or margin (45 percent construction, 50 percent design)
- Improve employee productivity (32 percent construction, 30 percent design)
The quarterly U.S. Houzz Pro Industry Barometer provides 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.