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Construction firms reported a rebound in Q3 activity, and their expectations for the final quarter of 2026 reached their highest level since early 2022, according to Houzz. Design firms were more cautious, while fuel costs, borrowing expenses and clients’ financial concerns continued to affect projects.
Construction firms reported a Q3 rebound and entered the final quarter of 2026 with their strongest expectations since early 2022, according to Houzz Inc.’s Q4 U.S. Houzz Pro Industry Barometer. The survey describes design firms as more measured, and finds that fuel costs and clients’ caution about economic conditions and borrowing continue to weigh on both sectors.
The report says the construction sector’s Recent Business Activity Indicator rose above 50 points in Q3. On the indicator, that threshold means more firms reported activity increasing than decreasing. The report characterizes the result as a recovery after softer activity earlier in the year; it does not provide a specific index reading in the supplied material.
Cost pressures were widespread: 89% of construction firms and about 74% of design firms said fuel costs affected their businesses in Q3. Among construction firms, 53% reported higher supplier delivery charges, 46% raised prices or added fuel surcharges to bids, and 44% absorbed the cost through lower margins. The corresponding shares among design firms were 42%, 31% and 24%.
Firms said clear, timely estimates or proposals often helped turn client interest into a commitment: 64% of construction firms and 56% of design firms cited that factor. Clients’ economic or personal finances were the most commonly cited reason for holding back, reported by 59% of construction firms and 60% of design firms. These are survey responses, not a count of projects or a measure of sector-wide revenue.
Costs and Cautious Clients Persist
The rebound points to improved near-term business sentiment in construction, but the survey also shows why a better outlook does not mean that all firms are seeing steady demand or easier project approvals. Fuel-related expenses are pushing firms to choose between passing costs to clients and accepting thinner margins. Those decisions can affect bids, profitability and whether a proposed project proceeds.
Client financing remains another constraint. Firms most often cited higher interest rates or borrowing costs as a financing issue affecting clients: 56% of construction firms and 43% of design firms reported it. Some clients were waiting for funds, while others had been denied financing or approved for less than they needed. For contractors, designers and customers, the figures suggest that estimates, budgets and funding decisions remain central to moving work forward, even as construction firms report improved expectations.
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From Softer Activity to Q3 Growth
The barometer covers the U.S. construction and design industries and compares recent business activity with firms’ expectations. Its Q3 reading follows softer business activity earlier in 2026, according to the report. Activity and expectations are distinct measures: the former reflects firms’ accounts of recent conditions, while the latter describes their outlook for the next quarter.
Houzz head of economic research Marine Sargsyan said construction professionals were ending the year with optimism after a long period of slow activity, while design firms were more cautious. The report also identifies several steps clients take before committing: 51% of construction firms and 35% of design firms said clients were finalizing scope or budgets; 49% and 44%, respectively, cited clients checking reviews, references or past work. Among design firms, 35% said project visuals helped clients move ahead.
Other reported reasons for delay included comparing bids, cited by 41% of construction firms and 27% of design firms, and finalizing project scope or budgets, cited by 24% in each group. These findings offer a snapshot of reported business conditions and client behavior, rather than a forecast of total construction spending.
“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
Survey Findings Leave Key Gaps
The supplied report does not state the barometer’s sample size, field dates, methodology or exact indicator readings. It also does not provide a numerical Q4 forecast or detail how expectations differ across firm sizes, locations or specialties. The findings therefore establish what surveyed firms reported, but not the scale of an industry-wide recovery.
It remains unclear whether the Q3 activity improvement will continue through Q4, whether firms can pass rising costs on without losing projects, and how clients’ borrowing conditions will affect demand. The survey figures do not establish that fuel costs or financing issues caused any particular project to be delayed or canceled.
Q4 Will Test the Rebound
The next test is whether the improved construction expectations translate into sustained activity during Q4. The barometer’s reported concerns point to the indicators firms will be watching: fuel and delivery expenses, client budgets, borrowing costs and project commitments. Design firms’ more measured outlook also leaves open whether their activity will follow the construction rebound.
Houzz’s report does not identify a date for another release or a specific next milestone. Further industry data would be needed to determine whether the Q3 improvement held, and whether firms’ pricing and margin pressures eased as the year closed.
Key Questions
What did Houzz report about construction activity?
Houzz said the construction sector’s Recent Business Activity Indicator rose above 50 points in Q3, meaning more firms reported increased activity than decreased activity. The report describes this as a rebound after softer activity earlier in 2026.
How optimistic are construction firms about Q4?
The report says construction firms’ expectations reached their highest level since early 2022. It does not give a specific Q4 forecast figure in the supplied material.
What pressures are firms reporting?
Fuel costs affected 89% of construction firms and about 74% of design firms. Firms also cited client financial caution and higher interest rates or borrowing costs as factors affecting project commitments.
What helps clients commit to a project?
Firms most often cited the speed and clarity of estimates or proposals. Checking a firm’s reviews, references or past work was another commonly reported factor; design firms also cited visuals of proposed projects.
Does the report prove the industry is in a sustained recovery?
No. It reports a Q3 activity rebound and stronger construction expectations, but does not establish whether the improvement will continue through Q4 or measure an industry-wide change in revenue or spending.
Source: rss
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