Business activity softened across the residential construction and design industries at the start of 2026, but professionals are entering the second quarter with measured optimism, according to the Q2 2026 U.S. Houzz Pro Industry Barometer. Construction firms expect modest improvement driven by gains in newly committed projects, while architecture and design firms maintain positive expectations despite sharper declines in recent activity, particularly project inquiries.
The recently released Barometer provides timely insights into the residential renovation market, tracking expectations, project backlogs and recent business activity among construction and architectural and design services firms in the United States.
“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,” says 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.”
The U.S. Houzz Pro Industry Barometer tracks expected, current and recent business activity among businesses in the construction sector and the architectural and design services sector. The Q2 2026 Barometer was fielded March 17 through April 6, 2026, and garnered responses from nearly 1,000 home improvement firms on Houzz.
Here’s what construction and design industry professionals are reporting.
Build-only remodelers report a backlog of 4.6 weeks (down slightly from 4.8 weeks in Q2 2025), while design-build firms report 6.7 weeks, a more pronounced decline from 8.0 weeks last year and the primary driver of the overall contraction.
Although pipelines have shortened across both groups, design-build firms continue to report longer wait times than build-only remodelers. The trend suggests a gradual normalization following elevated backlog levels seen in prior years.
The Project Backlog Indicator is based on survey questions that ask businesses to report wait times (in weeks) to start work on a midsize project. Scores are computed as average wait times without seasonal adjustment.
3. Recent activity declines despite stabilizing inquiries. The Recent Business Activity Indicator fell to 48 in Q1 2026 (from 51 in Q4 2025), indicating that more firms reported declines than reported increases in activity. Project inquiries showed modest improvement, rising 2 points to 51, while new committed projects dropped sharply to 45 (from 52 for Q4), suggesting weaker conversion of demand into signed work.
Results again vary by firm type. Build-only remodelers reported an indicator reading of 50 (down from 59 for Q4), while design-build remodelers improved slightly to 46 (from 43 for Q4), reflecting gains in both inquiries and committed projects despite remaining below the 50-point threshold.
The Recent Business Activity Indicator looks at actual activity over the previous three months. In contrast with the Expected Business Activity and Project Backlog indicators, which look forward in time, the Recent Business Activity Indicator looks back. It’s based on survey questions about whether businesses observed an increase, a decrease or no change in the actual number of project inquiries and new committed projects over the previous three months relative to the three months prior.
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Architectural and Design Firms
1. Expectations remain positive but edge down slightly. The Expected Business Activity Indicator for architectural and design services firms decreased 1 point to 60 for Q2 2026 (from 61 for Q1), reflecting mixed forward-looking momentum.
Expectations for project inquiries declined to 60 (from 62 for Q1), while expectations for new committed projects increased slightly to 61 (from 60 for Q1).
Interior designers report growing optimism, with the indicator rising to 65 (from 61 for Q1), supported by gains across both inquiries and committed projects. Architects, meanwhile, saw expectations decline to 58 (from 61 for Q1), reflecting softer outlooks across both components.
Despite the modest dip, the index remains above the 50-point line, indicating that more firms anticipate improving business conditions than worsening ones.
2. Backlogs drop significantly across the sector. The Project Backlog Indicator declined to 4.0 weeks at the start of Q2 2026, down 1.7 weeks from 5.7 weeks one year earlier, signaling notably shorter pipelines. Architects experienced the largest contraction, with backlogs falling to 4.0 weeks from 6.3 weeks a year ago. Interior designers also reported declines, with wait times easing to 4.0 weeks from 4.8 weeks.
Backlog levels have now converged across both groups, suggesting a continued normalization of project pipelines after extended periods of elevated demand.
3. Recent business activity softens sharply. The Recent Business Activity Indicator declined to 48 in Q1 2026 (from 54 in Q4 2025), driven primarily by a drop in project inquiries.
Inquiry activity fell 9 points to 45, while new committed projects edged down slightly to 52 (from 53 for Q4), highlighting weaker near-term demand signals despite relatively stable project commitments.
Architects reported a more pronounced slowdown, with the indicator dropping to 45 (from 55 for Q4). Interior designers, however, posted modest improvement, rising to 53 (from 50 for Q4), supported by increases in both inquiries and newly committed projects.
Overall, results point to uneven performance across the design sector, with interior designers showing resilience while architects face more significant softening.
This article was originally published by a www.houzz.com . Read the Original article here. .
Construction Firms
1. Expectations improve modestly. The Expected Business Activity Indicator related to project inquiries and new committed projects increased 3 points to 58 for Q2 2026 (from 55 for Q1 2026). The quarter-over-quarter gain was driven by improved expectations for new committed projects, which rose to 59 (up from 53 for Q1), while project inquiries held steady at 57.
Trends diverge across firm types. Design-build remodelers report a strong rebound, with the indicator increasing 10 points to 66 (from 56 for Q1), supported by gains in both inquiries and newly committed projects. In contrast, build-only remodelers declined 5 points to 50 (from 55 for Q1), reflecting softer expectations across both components.
The indicator is based on survey questions about whether businesses expect the number of project inquiries and new committed projects to increase, decrease or remain unchanged in the coming three months compared with the previous three months.
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