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Construction businesses reported a Q3 rebound, and their expectations for Q4 2026 reached their highest level since early 2022, according to Houzz’s industry survey. Fuel costs and clients’ financial caution remain obstacles for construction and design firms.
Construction firms reported a rebound in business activity during the third quarter and stronger expectations for the final quarter of 2026, according to Houzz Inc.’s Q4 U.S. Houzz Pro Industry Barometer. The report says construction expectations reached their highest level since early 2022, while fuel costs and cautious clients continue to weigh on both construction and design businesses.
The survey’s Recent Business Activity Indicator for construction rose above the 50-point threshold in Q3. That means more construction firms reported activity increasing than reported it decreasing; the supplied report does not give the indicator’s exact reading. The finding follows a softer stretch earlier in the year, though the report does not specify how much activity changed or how many firms took part in the survey.
Cost pressures were widespread among respondents. Fuel costs affected 89% of construction firms and about 74% of design firms. To manage those expenses, 53% of construction firms and 42% of design firms said they paid higher supplier delivery charges. Some passed costs on through higher prices or fuel surcharges—46% of construction firms and 31% of design firms—while 44% and 24%, respectively, said they absorbed the impact through lower profit margins.
Client decisions remain another constraint. Firms most often said clients delayed commitment while weighing economic conditions or personal finances: 59% of construction firms and 60% of design firms cited that reason. Higher interest rates or borrowing costs also affected clients, according to 56% of construction firms and 43% of design firms. Those figures describe responses in the survey, not the share of projects canceled or postponed.
Costs and Client Decisions Shape Demand
The reported rebound offers a more favorable signal for construction firms entering Q4, but it does not mean the underlying business pressures have eased. Fuel expenses can raise delivery costs, reduce margins or increase the price clients are asked to pay. Meanwhile, borrowing costs and household finances can delay commitments even when clients are interested in a project.
The report also points to practical factors firms say can help turn interest into signed work. Clear, timely estimates or proposals were identified by 64% of construction firms and 56% of design firms as helping clients commit. Other reported factors included clients settling project scope or budgets and checking a firm’s reviews, references or past work. For design firms, 35% said visuals of the proposed project helped move clients forward. These are survey responses, not evidence that any single practice guarantees a contract.
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A Rebound After Softer Activity
The Q4 2026 barometer compares recent business activity with firms’ expectations for the coming quarter. In the report, a reading above 50 points on the Recent Business Activity Indicator signals that more businesses reported increases than decreases. The supplied source describes construction’s Q3 result as a rebound after softer activity earlier in the year, but gives no exact quarterly score or historical series.
Design firms were described as more measured than construction businesses, while still cautiously optimistic. The report’s figures also show differences between the sectors in how costs and client decisions are affecting work. For example, 41% of design firms and 40% of construction firms said clients were waiting for funds to become available; 14% of design firms and 17% of construction firms cited clients being denied financing or approved for less than they needed.
“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
The Size of the Recovery Is Unspecified
The source material does not provide the indicator’s exact Q3 value, the survey’s sample size, or enough detail to measure how broad the rebound was across regions or types of firms. It also does not quantify the change in Q4 expectations compared with earlier quarters. The reported high since early 2022 applies to construction expectations, not necessarily to actual project volume or revenue.
It remains unclear whether optimism will translate into completed projects, particularly while clients review finances, compare bids and face borrowing costs. The survey figures reflect what participating firms reported; they do not establish the cause of each delayed decision or show how conditions will develop through the rest of Q4.
Q4 Will Test the Outlook
The next test is whether construction firms’ stronger expectations are matched by continued activity and signed projects during Q4. The report identifies fuel expenses and client financing concerns as ongoing pressures, but the supplied material does not give a forecast for their direction or a date for the next survey release.
Readers can look to subsequent Houzz industry survey results and company reporting for evidence of whether the Q3 rebound held. For now, the report supports a measured conclusion: construction sentiment improved, while the conditions affecting costs and client commitments remain unsettled.
Key Questions
What did Houzz report about construction activity?
Houzz said the Recent Business Activity Indicator for construction rose above 50 points in Q3, meaning more firms reported activity increasing than decreasing. The source material does not provide the exact reading.
How optimistic are construction firms about Q4 2026?
The report says construction expectations reached their highest level since early 2022. It does not provide the exact expectations score or predict how many projects will be completed.
What pressures are construction and design firms reporting?
Fuel costs affected 89% of construction firms and about 74% of design firms. Firms also said clients were cautious because of economic and personal finances, borrowing costs and the need to compare bids or finalize budgets.
What helps clients commit to projects, according to the survey?
Firms most often cited the speed and clarity of estimates or proposals. Reviews, references, past work and settling project scope or budget were also named; design firms additionally cited visuals of proposed projects.
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