Houzz Inc. recently released the Q4 2026 U.S. Houzz Pro Industry Barometer. The report finds that construction and design professionals are entering the last quarter of the year with improved expectations after mixed Q3 results, though cost pressures and client caution persist. Following softer business activity earlier this year, the construction sector rebounded in Q3, with the recent business activity indicator rising above the 50-point threshold as more firms reported increases in activity than decreases. Building on this improvement, construction firms reported stronger expectations for Q4, with the expected business activity Indicator reaching 74 points, its highest level since Q1 2022. The increase reflects stronger expectations for both project inquiries and new committed projects. Meanwhile, architecture and design firms (hereafter referred to as “design”) have more tempered expectations as project inquiries and new committed projects declined. However, both recent and expected business activity indicators remain above 50 for the design sector.
“Construction pros are closing out 2026 with optimism, as expectations reach their highest level since early 2022 following a rebound from a long stretch of slow activity. Design firms are more measured, though cautiously optimistic,” said Marine Sargsyan, head of economic research at Houzz. “Fuel costs remain a pressure point for most businesses, with some pros passing them on to clients through higher prices and surcharges and others absorbing them in their margins. And because clients are taking a careful look at economic conditions and borrowing costs before they commit, a timely, clear estimate and a proven track record are often what help pros convert interest into signed projects.”
Fuel Pressures Weigh on Businesses
In Q3, nearly 9 in 10 construction firms (89%) and roughly three-quarters of design firms (74%) reported that their businesses were impacted by fuel costs. As a result, firms paid higher supplier delivery charges (53% construction, 42% design), raised prices or added fuel surcharges to bids (46% construction, 31% design), and absorbed the cost through lower profit margins (44% construction, 24% design).
Client Decisions in Focus
When it comes to winning work, firms most often said the speed and clarity of their estimate or proposal helped clients commit to a project (64% construction, 56% design). Firms also pointed to clients finalizing project scope or budget (51% construction, 35% design) and checking the firm’s reviews, references or past work (49% construction, 44% design).
On the other hand, firms reported that clients most often held back from committing while weighing economic conditions or their own finances (59% construction, 60% design), followed by comparing bids or quotes from other pros (41% construction, 27% design) and finalizing project scope or budget (24% each). When asked about financing or payment issues affecting their clients, firms most often cited higher interest rates or borrowing costs (56% construction, 43% design), waiting for funds to become available (40% construction, 41% design), and being denied financing or approved for less than needed (17% construction, 14% design).
Q4 2026 Construction Sector Barometer
- The Expected Business Activity Indicator for construction businesses increased by 13 points to 74 for Q4 2026 (from 61 for Q3 2026), driven by a significant jump in expectations for new committed projects, which rose 14 points to 74. Project inquiries also rose to 73 (up 12 points from Q3 2026).
- Overall, the Project Backlog Indicator is steady compared with the same time last year: 5.5 weeks at the start of Q4 2026. Build-only remodelers report a 5.6-week backlog (up 1.2 weeks from 4.4 weeks), while design-build remodelers report a 5.4-week backlog (down 0.9 weeks from 6.3 weeks).
- The Recent Business Activity Indicator rose to 55 in Q3 2026 (from 47 in Q2 2026). New committed projects rose 15 points to 60, while project inquiries held steady at 50. The recent business activity indicator increased to 52 for build-only remodelers (from 47) and to 58 for design-build remodelers (from 47) in Q3 2026.
Q4 2026 Architectural and Design Services Sector Barometer
- The Expected Business Activity Indicator for the design sector decreased to 62 for Q4 2026 (down 6 points from 68 in Q3 2026). The decline reflects lower expectations for both project inquiries, which fell to 63 (from 67), and new committed projects, which decreased to 60 (from 69). Expectations for Q4 decreased among architects to 62 (from 71), while easing slightly among interior designers to 62 (from 63).
- The Project Backlog Indicator dropped to 4.9 weeks at the start of Q4 2026, 0.6 weeks shorter than a year ago (from 5.5 weeks in Q4 2025). This decline was driven by the backlog for interior designers, which fell to 3.3 weeks (down 1.6 weeks from 4.9 weeks). Meanwhile, architects reported a slight increase to 5.9 weeks (up 0.1 weeks from 5.8 weeks in Q4 2025).
- The Recent Business Activity Indicator decreased to 53 in Q3 2026 (down 9 points from 62 in Q2 2026). This was driven by declines in new committed projects to 52 (down 11 points from 63) and in project inquiries to 54 (down 8 points from 62). Architects reported a particularly sharp decline, with the indicator falling to 53 (from 67), while interior designers reported a slight decrease to 54 (from 55).
The Q4 2026 Barometer was fielded October 2 through October 13, 2026, and garnered responses from nearly 1,000 firms in the construction and design industry on Houzz. n=998.