Contractors See Spring Uptick as Houzz Report Points to Project Rebound
Key Highlights
- Contractors expect a spring rebound driven by new project commitments
- Rising material costs and labor shortages continue to pressure margins and capacity
- Firms are competing with pricing strategies, training programs and improved customer communication
Houzz Inc. has released its Q2 2026 U.S. Houzz Pro Industry Barometer, showing softer business activity in early 2026 but improving expectations among contractors heading into the spring season.
While both construction and design sectors reported a slowdown in Q1, contractors are signaling a potential rebound driven by increased expectations for newly committed projects. Sentiment varies by business model, with design-build firms anticipating stronger gains, while build-only remodelers expect more moderate growth.
“After recent activity slowed in the first quarter compared with the end of 2025, construction and design pros are entering Q2 with cautious optimism, particularly in construction, where expectations for new projects are showing early signs of a rebound,” said Marine Sargsyan, head of Economic Research at Houzz. “At the same time, persistent cost pressures and client hesitation are reshaping how firms compete. We’re seeing pros adapt in real time with construction firms investing in workforce development and more flexible pricing, while design professionals are doubling down on client experience and branding.”
Cost Pressure and Project Delays Continue to Impact Contractors
Rising material costs remain the top concern for contractors, cited by nearly half of firms (49%), underscoring ongoing margin pressure across projects.
Client hesitation is also affecting project timelines, with 27% of contractors reporting that homeowners are delaying starts. At the same time, macroeconomic uncertainty continues to influence buying decisions and backlog stability.
Labor availability remains a critical constraint, with 67% of construction businesses reporting skilled labor shortages—continuing to limit capacity even as demand shows signs of improvement.
Contractors Adjust Pricing and Operations to Stay Competitive
To stay competitive in a tightening market, contractors are actively adjusting how they operate. Improved client communication emerged as the most common response, cited by 60% of construction firms.
Financial strategies are also playing a larger role, with 42% of contractors adjusting pricing or offering promotions to secure projects—more than double the rate reported by design firms.
These shifts reflect a more aggressive approach to winning work as competition increases and customers become more selective.
Workforce Strategy Shifts Toward Training and Recruiting
Contractors are also evolving how they attract and retain talent. More than half (57%) report offering on-the-job training as a primary strategy to appeal to younger workers and build long-term workforce pipelines.
Recruiting efforts are increasingly digital, with 35% of construction firms leveraging social media to connect with candidates. Companies are also highlighting their use of technology—including platforms like Houzz Pro—to attract workers interested in modern, tech-enabled job environments.
Technology and Talent Investment Shape Near-Term Outlook
As contractors enter the spring season, the outlook reflects a mix of improving demand signals and ongoing operational challenges. Firms that invest in workforce development, pricing flexibility and customer experience are positioning themselves to capture new opportunities as project activity rebounds.
To download a copy of the new report, visit hwww.houzz.com/ideabooks/industry-research.