Houzz Inc. has released its Q1 2026 U.S. Houzz Pro Industry Barometer, which reveals a "moderately positive" outlook for 2026 in the construction sector. The data shows 56% of contractors anticipate a good to very good year, 28% expect business conditions to remain stable, and 16% anticipate weaker performance than last year.

Sentiment among the design services sector is more mixed, with half (50%) expecting a good to very good year, 35% reporting a neutral outlook, and the remaining 15% 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.

“Construction and design businesses are heading into 2026 with a measured but resilient outlook,” said Marine Sargsyan, head of economic research at Houzz. “While expectations for the broader national economy remain subdued and cost and labor pressures persist, many firms anticipate stable demand for their projects. To drive revenue growth in 2026, businesses are adjusting their strategies by raising prices, prioritizing larger and higher-value projects, and investing in employee productivity, reflecting broader industry interest around AI-enabled software tools.”

2026 Outlook

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%), compared with 57% of construction firms. 

• Mixed economic expectations: More businesses expect local economic conditions to strengthen (38% construction, 43% design) than worsen (29% construction, 26% design), while a larger share of pros anticipate the national economy will slow (43% construction, 51% design) rather than improve (30% construction, 32% design).

• Ongoing labor constraints: More than one-third of construction firms and nearly one-third of design firms expect labor shortages to persist (36% and 30%, respectively).

• Rising costs: A majority of businesses expect product and material costs to increase (69% construction, 65% design).

• Top strategies to achieve revenue growth in 2026 include: 

  • Pursue larger-budget projects (71%, construction, 64% design)

  • Increase markup or margin (45% construction, 50% design)

  • Improve employee productivity (32% construction, 30% design)

Near-term expectations are more varied across the construction and design sectors as businesses enter Q1 2026.

Source: houzz.com