Home Firms’ Optimism Wanes After Mixed First-Quarter Performance

After kicking off 2025 feeling bullish, construction and design professionals have tempered their optimism about business activity in the second quarter of the year. This follows a significant dip in Q1 performance among construction firms and relatively stable performance among design firms.

Those are key findings in the just-released Q2 2025 U.S. Houzz Renovation Barometer, which provides timely insights into the residential renovation industry, including expectations, project backlogs and recent activity among businesses in the construction sector and the architectural and design services sector.

“Optimism continues, yet residential construction and design businesses are moderating expectations amid mixed Q1 activity and economic uncertainty,” Houzz staff economist Marine Sargsyan says. “This tempered outlook is unsurprising, as firms continue to navigate challenges including rising material costs, cautious client spending and persistent labor shortages. In response, many firms are proactively adjusting procurement strategies and selectively stockpiling materials in preparation for anticipated tariff-driven price hikes, especially on lumber, steel and cabinetry.”