Houzz Inc. recently released the Q2 2026 U.S. Houzz Pro Industry Barometer. The report finds that while recent business activity softened across both construction and design sectors in the first quarter, professionals maintain a moderate outlook for the spring. Construction firms are signaling a rebound driven by improved expectations for new committed projects, while architecture and design firms (hereafter referred to as “design”), have a favorable perspective despite declines in recent activity. In the construction sector, design-build firms anticipate a significant surge in activity, while build-only remodelers expect more modest growth. Within the design sector, interior designers report an increase in sentiment, whereas architects’ expectations have leveled off compared to the previous quarter.
“After recent activity slowed in the first quarter compared with the end of 2025, construction and design pros are entering Q2 with cautious optimism, particularly in construction, where expectations for new projects are showing early signs of a rebound,” said Marine Sargsyan, head of Economic Research at Houzz. “At the same time, persistent cost pressures and client hesitation are reshaping how firms compete. We’re seeing pros adapt in real time with construction firms investing in workforce development and more flexible pricing, while design professionals are doubling down on client experience and branding.”
Top Business Concerns
Rising costs and macroeconomic uncertainty are top of mind for professionals as they enter the second quarter. Nearly half of construction (49 percent) and design (45 percent) firms cite the increasing cost of products and materials as a primary concern. Broader economic factors are also weighing on the industry, particularly for design professionals, with 3 in 10 reporting concerns over geopolitical uncertainty and tariffs (30 percent each, compared with 23 percent and 17 percent respectively for construction firms). Client hesitation remains a hurdle, with more than a quarter of pros across both sectors (27 percent for construction and 30 percent for design) reporting that homeowners are delaying project starts. In the construction sector, more than two-thirds of businesses face skilled labor shortages (67 percent).
Strategies for Competition and Talent Acquisition
Construction and design firms are actively evolving their operations to remain competitive; when asked about changes made in the last three months due to increased competition, a majority of construction pros (60 percent) and nearly half of design pros (45 percent) identified improved client communication as their primary strategy. When asked how they are appealing to younger talent, more than half of construction firms (57 percent) reported offering on-the-job training, while design firms are more likely to lean into academic partnerships (26 percent). Both sectors are heavily leveraging social media for recruiting (35 percent of construction and 36 percent of design firms).