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Construction firms reported a rebound in Q3 activity, and their expectations for the final quarter of 2026 reached their highest point since early 2022, according to Houzz’s Q4 U.S. industry survey. Design firms were more measured. Fuel costs, borrowing expenses and clients’ hesitation to commit remain obstacles for both sectors.
Construction activity rebounded in Q3, and firms entered the final quarter of 2026 with their most optimistic outlook since early 2022, according to Houzz Inc.’s Q4 U.S. Houzz Pro Industry Barometer. Design firms were more cautious, while fuel expenses and clients’ reluctance to commit continued to weigh on both parts of the construction and design industry.
The report says the construction sector’s Recent Business Activity Indicator rose above the 50-point threshold in Q3. That reading means more surveyed firms reported activity increasing than reported it decreasing; it does not mean every construction business saw growth. The survey followed a softer period earlier in the year, which Houzz described as a long stretch of slow activity.
Cost pressure was widespread: 89% of construction firms and about 74% of design firms said fuel costs affected their businesses. Among construction firms, 53% reported higher supplier delivery charges, 46% said they raised prices or added fuel surcharges to bids, and 44% absorbed costs through lower margins. For design firms, the corresponding shares were 42%, 31% and 24%.
Businesses also described what helps turn a potential job into a signed project. A fast, clear estimate or proposal was cited by 64% of construction firms and 56% of design firms. Clients’ decisions were also influenced by completing project scope or budget discussions and reviewing a firm’s references, reviews or past work. Among design firms, 35% said project visuals helped clients move forward.
Costs and Client Decisions Shape Demand
The findings point to a recovery in activity that has not removed the financial constraints facing contractors and design businesses. Higher fuel and delivery expenses can reduce margins or require firms to adjust prices, while clients weighing their finances may delay or scale back projects. The split between the sectors also matters: stronger construction expectations do not necessarily signal an equally strong outlook for design practices.
For clients, the survey suggests that project timing and affordability remain central to decisions. Firms most often said clients held back while weighing economic conditions or personal finances: 59% of construction firms and 60% of design firms cited that reason. Those figures describe what firms reported about client behavior, not a direct measure of all homeowners’ plans.
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A Q3 Recovery After Slower Activity
The Q4 Barometer combines reported recent business activity with firms’ expectations for the coming quarter. In this report, the Q3 activity reading reflects whether firms saw activity rise or fall, while the outlook captures expectations entering Q4. The source says the construction indicator moved above 50 after softer activity earlier in 2026, but it does not provide the indicator’s exact score in the supplied report.
Houzz’s head of economic research, Marine Sargsyan, said construction professionals were closing out 2026 with optimism and described design firms as cautiously optimistic. The report also identifies borrowing costs and client financing as ongoing constraints: 56% of construction firms and 43% of design firms cited higher interest rates or borrowing costs affecting clients. Some firms said clients were waiting for funds, while others reported financing denials or approvals below the amount requested.
“Construction pros are closing out 2026 with optimism, as expectations reach their highest level since early 2022 following a rebound from a long stretch of slow activity. Design firms are more measured, though cautiously optimistic.”
— Marine Sargsyan, head of economic research at Houzz
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How Durable Is the Rebound?
The report describes a survey-based rebound and improved expectations, but the supplied material does not state the sample size, field dates, exact indicator score or detailed methodology. It also does not establish whether the activity improvement continued into Q4 or how many firms ultimately converted proposals into projects.
It remains unclear how fuel prices, interest rates and household finances will change through the quarter, or whether the reported optimism will translate into completed work and stronger profitability. The figures reflect responses from surveyed industry professionals and should not be read as a forecast of every firm’s results.
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Q4 Results Will Test Expectations
The next key test is whether construction firms’ improved expectations are matched by continued activity and signed projects during Q4. The survey’s findings suggest that client budgets, financing access and operating costs will remain important factors in that outcome. The source material does not provide a date for a follow-up report or a specific forecast for the quarter.
For now, the reported outlook is positive but qualified: construction firms are more upbeat after the Q3 rebound, design firms remain more measured, and both groups continue to report cost and commitment barriers. Further data would be needed to establish whether the recovery is broadening or lasting.
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Key Questions
What did Houzz report about construction activity?
Houzz said the Recent Business Activity Indicator rose above 50 in Q3, meaning more surveyed construction firms reported increases in activity than decreases.
Are design firms as optimistic as construction firms?
No. Houzz described construction firms’ expectations as reaching their highest level since early 2022, while design firms were more measured and cautiously optimistic.
What costs are affecting firms and their clients?
Firms reported pressure from fuel and supplier delivery costs. They also said clients were affected by higher borrowing costs, waiting for funds, or being denied financing or receiving less than requested.
What helps clients commit to a project?
Surveyed firms most often cited the speed and clarity of estimates or proposals. Reviews, references and past work also influenced decisions; design firms additionally cited visuals of proposed projects.
Does the report confirm that the industry will keep growing in Q4?
No. The report records firms’ expectations and Q3 activity; it does not establish what Q4 results will be. Continued activity, costs and client financing conditions remain uncertain.
Source: rss
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