“Construction professionals are closing the year with renewed confidence, supported by a surge in project activity in the third quarter and recent interest rate cuts,” said Houzz staff economist Marine Sargsyan. “While backlogs have come down from record highs, firms continue to manage steady pipelines and make adjustments to maintain profitability. In contrast, design professionals remain more cautious, signaling that while homeowner interest persists, project planning cycles may lengthen as clients weigh broader economic factors heading into 2026.”

Q4 2025 Construction Sector Barometer

· The Expected Business Activity Indicator for construction businesses related to project inquiries and new committed projects increased by 8 points to 66* for Q4 (from 58 for Q3). This is largely driven by a 12-point uptick in expectations for new committed projects in Q4. Similarly, expectations for project inquiries increased by 3 points to 67 for Q4 (from 64 for Q3). Both build-only remodelers and design-build firms expect improved Q4 business activity, with the indicator at 66 points, each. 

· The Project Backlog Indicator is 5.4 weeks in the beginning of Q4, which is 5.1 weeks shorter than a year ago. Build-only remodelers report a 4.4 week backlog (down 3.9 weeks), while design-build remodelers report a 6.3 week backlog (down 6.5 weeks).

· The Recent Business Activity Indicator related to project inquiries and new committed projects jumped to 55 (from 38 in Q2). This is driven by a 20-point increase in project inquiries to 62 in Q3, relative to the previous quarter. Similarly, new committed projects increased by 13 points, reaching 48 points. The recent business indicator increased to 56 for build-only remodelers and to 54 for design-build remodelers in Q3. 

Q4 2025 Architectural and Design Services Sector Barometer

· The Expected Business Activity Indicator related to project inquiries and new committed projects increased to 59 for Q4 2025 (up 1 point from Q3) for the design sector. This is driven by a 2-point increase in expectations for new committed projects, while expectations for project inquiries remained steady at 58 points. Expectations for Q4 among both architects and interior designers inched up to 58 and 61 respectively. 

· The Project Backlog Indicator is 5.5 weeks in the beginning of Q4, which is 0.8 weeks shorter than a year ago. Architects report a 5.8 week backlog (a decrease of two weeks), while interior designers report a 4.9 week backlog (an increase of one week).

· The Recent Business Activity Indicator related to project inquiries and new committed projects decreased to 43 in Q3 (versus 45 in Q2). This is driven by drops in both project inquiries (43) and new committed projects (42) in Q3 (down three and two points, respectively). Architects reported the most significant decrease to 39 (down six points), followed by interior designers (48; up three points).

2026 Homeowner Outlook and Business Response: 

Houzz asked construction and design pros about the challenges they anticipate homeowners will face when deciding to move forward with renovation projects in 2026. The top homeowner concerns include: 

· Overall project costs (74% construction, 80% design).

· The economy/job stability (40% construction, 41% design)

· Tariffs (31% construction, 44% design)

· Securing financing or loans (16% construction, 11% design)

· Competing household priorities (15% construction, 11% design)

· Availability of products and materials (13% construction, 19% design)

Amid ongoing economic uncertainty, businesses across the industry are taking proactive steps to strengthen their operations, protect margins and sustain growth. Nearly nine in 10 firms expect to make changes to the way they run their businesses (86% construction, 86% design). The most common strategies include adopting or upgrading technologies, particularly those with project management capabilities and AI-powered features. More than a third of firms across both sub-sectors plan to place greater emphasis on marketing and client acquisition (34% construction, 39% design), while others are also adjusting pricing structures and contract terms (40% construction, 32% design) to maintain stability.

The quarterly Houzz U.S. Renovation Barometer provides timely insights into the residential renovation 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 Q4 2025 Barometer was fielded September 18 through October 6, 2025 and garnered responses from over 1,000 home improvement firms on Houzz. n=1,088.

The Houzz community includes more than 3 million home remodeling and design professionals, including architects, interior designers, general contractors and design-build firms. Houzz Pro provides professionals and their clients with all-in-one project management and design software, including CRM, estimates, takeoffs and more. 

*If an indicator is above the 50-point line, more businesses reported an increase in expected or recent business activity compared to the previous quarter than those reporting decreases.