Hardware Retailing The Industry's Source for Insights and Information
Construction and design professionals are entering the last quarter of the year with improved expectations after mixed Q3 results, though cost pressures and client caution persist, according to Houzz Inc.’s Q4 2026 U.S. Houzz Pro Industry Barometer. Following softer business activity earlier this year, the construction sector rebounded in Q3, with the Recent Business Activity Indicator rising above the 50-point threshold as more firms reported increases in activity than decreases.
“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,” says Marine Sargsyan, head of economic research at Houzz. “Fuel costs remain a pressure point for most businesses, with some pros passing them on to clients through higher prices and surcharges and others absorbing them in their margins. And because clients are taking a careful look at economic conditions and borrowing costs before they commit, a timely, clear estimate and a proven track record are often what help pros convert interest into signed projects.”
In Q3, 89% of construction firms and around 74% of design firms reported that their businesses were impacted by fuel costs, prompting firms to pay higher supplier delivery charges (53% construction, 42% design), raise prices or add fuel surcharges to bids (46% construction, 31% design) and absorbed the cost through lower profit margins (44% construction, 24% design).
Firms most often said the speed and clarity of their estimate or proposal helped clients commit to a project (64% construction, 56% design). Other factors influencing project committment included clients finalizing project scope or budget (51% construction, 35% design) and checking the firm’s reviews, references or past work (49% construction, 44% design). Among design firms, 35% also said seeing visuals of the proposed project helped clients move forward.
Firms reported that clients most often held back from committing while weighing economic conditions or their own finances (59% construction, 60% design), followed by comparing bids or quotes from other pros (41% construction, 27% design) and finalizing project scope or budget (24% each). When asked about financing or payment issues affecting their clients, firms most often cited higher interest rates or borrowing costs (56% construction, 43% design), waiting for funds to become available (40% construction, 41% design) and being denied financing or approved for less than needed (17% construction, 14% design).
