Houzz Inc., the AI-driven, all-in-one software for construction and design, released the Q3 2026 U.S. Houzz Pro Industry Barometer. The report finds that construction and design professionals are entering Q3 with optimism despite ongoing economic pressures and mixed quarterly results. Construction firms expect business activity to improve, driven by stronger project inquiries, even after the recent business activity indicator remained below the 50-point threshold in Q2. Meanwhile, design firms enter the quarter with significant momentum fueled by gains in both project inquiries and new committed projects.
“Construction and design pros are heading into Q3 with renewed confidence as expectations for improved business activity broaden across the industry, with the design sector seeing especially strong momentum,” said Marine Sargsyan, head of Economic Research at Houzz. “That optimism comes alongside persistent market pressures. Pros are navigating a combination of cost, labor and client-related concerns, and they are responding strategically to protect profitability.”
Recent challenges were led by a mix of rising product and material costs (40% construction, 48% design), client financial uncertainty (33% construction, 49% design), increased costs of labor (28% construction, 20% design) and higher fuel or transportation costs (28% construction, 20% design).
To navigate these challenges, pros are adapting business strategies.
Raising prices or rates was the most common response (40% construction, 35% design), followed by becoming more selective about project size and budgets (34% construction, 32% design) and adjusting project timelines or phases (29% construction, 27% design). Construction firms are also narrowing their geographic focus, with 1 in 5 concentrating on projects closer to their home office (20%) or reducing overall project volume (19%). Meanwhile, design firms are prioritizing relationships by focusing on repeat clients and referrals (25%).
Looking ahead, the vast majority of construction and design firms anticipate ongoing pressures in the coming quarter (92% construction and 90% design). Maintaining profitability remains a key pressure point across both sectors as pros continue to navigate elevated costs, labor pressures and client-related constraints.
Q3 2026 Construction Sector Barometer
The Expected Business Activity Indicator for construction businesses increased by 3 points to 61 for Q3 2026 (from 58 for Q2 2026), driven primarily by greater expectations for project inquiries, which rose 4 points to 61. New committed projects also inched up to 60 (up 1 point from Q2 2026). Trends diverged across pro types: build-only remodelers anticipate improved Q3 business activity, gaining 9 points from Q2 to reach 59, while design-build firms expect a modest pullback, declining 3 points from 66 in Q2 to 63 in Q3. Both indicators remain above 50, signaling that more firms expect business activity to improve than decline.
Overall, the Project Backlog Indicator is steady compared with the same time last year: 6.1 weeks at the start of Q3 2026. Build-only remodelers report a 6.0 week backlog (down 0.4 weeks from 6.4 weeks), while design-build remodelers report a 6.2 week backlog (up 0.4 weeks from 5.8 weeks).
The Recent Business Activity Indicator declined modestly to 47 in Q2 2026 (from 48 in Q1 2026). Project inquiries also softened slightly (dipping 1 point to 50), while new committed projects held steady at 45. The recent business activity indicator declined to 47 for build-only remodelers (from 50) but increased to 47 for design-build remodelers (from 46) in Q2 2026.
Q3 2026 Architectural and Design Services Sector Barometer
The Expected Business Activity Indicator for the design sector increased to 68 for Q3 2026 (up 8 points from 60 in Q2 2026). The improvement reflects expected gains in both project inquiries, which rose to 67 (from 60), and new committed projects, which increased to 69 (from 61). Expectations for Q3 increased sharply among architects to 71 (from 58), while easing slightly among interior designers to 63 ( from 65).
The Project Backlog Indicator dropped to 4.7 weeks at the start of Q3 2026, 1.2 weeks shorter than a year ago (from 5.9 weeks in Q3 2025). This decline was driven by the backlog for architects, which fell to 5.1 weeks (down 1.6 weeks from 6.7 weeks). Meanwhile, interior designers also reported a decline to 3.9 weeks (down 0.5 weeks from 4.4 weeks in Q3 2025).
The Recent Business Activity Indicator increased significantly to 62 in Q2 2026 (up 14 points from 48 in Q1 2026). This was driven by a steep increase in project inquiries to 62 (up 17 points from 45), while new committed projects also improved to 63 (from 52). Architects reported particularly strong gains, with the indicator climbing to 67 (from 45), while interior designers reported a more modest increase to 55 (from 53).
The quarterly U.S. Houzz Pro Industry Barometer provides timely 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. Scores for each component are computed as a seasonally adjusted diffusion indices on a scale of 0 to 100, with index values over 50 indicating that a greater proportion of firms reported quarter-over-quarter increases than those reporting decreases.
Detailed methodology and underlying quarterly indices for the construction sector and the architectural and design services sector, and other information on market conditions, can be found on houzz.com/research. The Q3 2026 Barometer was fielded July 2 through July 8, 2026, and garnered responses from nearly 1,000 firms in the construction and design industry on Houzz. n=947.
