Construction and Design Pros Grow More Cautious as Activity Slows, Houzz Survey Finds

Houzz Inc., a leading software platform for construction and design, today released its Q3 2025 Houzz US Renovation Barometer. The report reveals a continued decline in business sentiment across both the construction sector and the architecture and design services sector (hereafter referred to as “design”), marking the second consecutive quarter of reduced optimism as activity wanes.

The outlook among surveyed firms is significantly lower than it was at the start of the year, although many still anticipate improved Q3 performance. This reflects caution from pros due to ongoing economic uncertainty, such as rising costs, potential tariffs and inflation.

“Expectations have become increasingly cautious among construction and design professionals as they navigate ongoing economic challenges and reduced business activity," said Marine Sargsyan, Houzz staff economist. “That said, stable backlogs and gradual adjustments in response to market conditions indicate some resilience. Most are hopeful for improved momentum through the second half of the year.”

Q3 2025 Construction Sector Barometer

The Expected Business Activity Indicator for construction businesses related to project inquiries and new committed projects decreased by 1 point to 58 for Q3 (from 59 for Q2). This is largely driven by a 9-point decline in expectations for new committed projects in Q3. Conversely, expectations for project inquiries increased by 7 points to 64 for Q3 (from 57 for Q2). Both build-only remodelers and design-build firms expect improved Q3 business activity, with the indicator at 58 points each.
The Project Backlog Indicator is 6.1 weeks in the beginning of Q3, which is 1.5 weeks shorter than a year ago. Build-only remodelers report a decrease of 1.2 weeks to 6.4 weeks, while design-build remodelers report a decrease of 1.9 weeks in wait times at 5.8 weeks.
The Recent Business Activity Indicator related to project inquiries and new committed projects dropped to 38 (from 42 in Q2). This is driven by an 8-point drop in new committed projects to 34 in Q2, relative to the previous quarter. Project inquiries stayed stable at 42 points. The recent business indicator dropped to 35 for build-only remodelers and to 42 for design-build remodelers in Q2. The overall indicator is below the 50-point line, as more businesses reported a decline in business activity than those reporting improvements. Main challenges to business activity included increased prices of products and materials (45%), higher labor costs (32%), and difficulty maintaining profit margin (26%).

Q3 2025 Design Sector Barometer

The Expected Business Activity Indicator related to project inquiries and new committed projects declined to 58 for Q3 2025 (down 4 points from Q2) for the architectural and design services sector. This is driven by a 4-point decline in expectations for project inquiries and a 4-point drop in expectations for new committed projects (58 each). While the indicators dipped 2 points for architects (to 57) and 8 points for interior designers (to 59), more businesses expect an improvement in business activity in Q3, when compared to Q2 activity, than those expecting declines.
The Project Backlog Indicator is 5.9 weeks in the beginning of Q3, which is 0.2 weeks longer than a year ago. Architects report a decrease of 0.7 weeks to 6.7 weeks, while interior designers report an increase of 1.5 weeks in wait times at 4.4 weeks.
The Recent Business Activity Indicator related to project inquiries and new committed projects decreased to 45 in Q2 (versus 59 in Q1). This decrease is driven by drops in both project inquiries and new committed projects in Q2, each decreasing by 11 and 16 points to 46 and 44, respectively. The indicator is down 14 points for architects (45) and down 13 points for interior designers (45). Top challenges to business activity included higher prices of products and materials (53%), increased labor costs (26%) and difficulty maintaining profit margin (23%).

Anticipated Economic Factors

Houzz continued to explore how pros expect economic factors—such as new tariffs, rising interest rates and labor shortages—to impact their businesses and the industry at large using the Q3 2025 Houzz US Renovation Barometer survey. Findings (as reported by each industry sector) include:

More than 9 in 10 residential construction and design professionals anticipate that market shifts will have a negative impact on their business in Q3 (93% construction, 94% design). Key factors include tariffs (48% construction, 59% design), inflation (42% construction, 46% design) and hesitation from clients when committing to projects (38% construction, 37% design).
Pros are most concerned about tariffs on lumber or plywood (66% construction, 68% design), steel (56% construction, 65% design), flooring (50% construction, 60% design), and aluminum (41% construction, 43% design).
Businesses in the design sector anticipate tariffs to impact lighting fixtures (73%), appliances (71%), indoor furniture (65%). Construction businesses are concerned about appliances (68%), plumbing fixtures (56%), cabinetry (55%) and HVAC systems (44%).
Both sectors anticipate moderate to severe labor shortages, particularly among general laborers (59% construction, 48% design) and finish carpenters (45% construction, 39% design). Shortages of framers (31% construction, 29% design) and plumbers (36% construction, 31% design) are also notable concerns.

About the Barometer

The quarterly Houzz US Renovation Barometer provides timely insights into the residential renovation industry, including expectations, project backlogs and recent activity among businesses in the US 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 2025 Barometer was fielded June 14th through July 1st, 2025 and garnered responses from over 900 home improvement firms on Houzz. n=929.

About Houzz

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.