Houzz 2026 State of the Industry Report reveals a divided outlook

Houzz, the leading platform for home renovation and design, has released the 2026 Houzz UK State of the Industry report, which reveals businesses are shifting priorities in the face of ongoing cost pressures and demand uncertainty.

The latest Houzz UK State of the Industry report provides an outlook for 2026 and review of 2025 performance for residential construction and design businesses. The findings point to a widening confidence gap across the sector, with architect and interior designer optimism improving compared with last year, while design and build firms remain more cautious.

More than half of architects (55%) and interior designers (54%) report a good or very good outlook for 2026, a notable increase compared to last year, when optimism stood at 33% and 45%, respectively. In contrast, only 32% of design and build firms share that level of optimism, while 47% expect the year to be poor or very poor. This comes after a challenging 2025 for many firms. Nearly three-quarters of design and build firms and interior designers (73% each) say their 2025 gross revenues fell short of expectations, along with more than half of architects (55%).

“The outlook for 2026 is far from uniform across the industry following a challenging year,” said Marine Sargsyan, head of economic research at Houzz. “While optimism among architects and interior designers is more widespread compared with last year, design and build firms remain more cautious. In response to ongoing cost pressures and demand uncertainty, many pros are prioritising efficiency and strengthening their sales processes as top business strategies for the year ahead.”

While many firms reported revenue and profit declines in 2025, year-on-year comparisons suggest conditions may be easing. The share of businesses reporting revenue increases rose (38% versus 34% in 2024), and those reporting revenue decreases dipped slightly compared with 2024 (45% versus 47%). Profitability also improved, with fewer firms reporting declines (47% versus 62% in 2024) and the share reporting increases rising slightly (27% versus 26% in 2024).

As firms navigate ongoing cost pressures and demand uncertainty, many are prioritising operational improvements in 2026. Increasing efficiency is the leading investment area across sectors, with 65% of design and build firms, 57% of interior designers and 56% of architects dedicating resources to streamline processes and improve productivity. Design and build firms are also focused on reducing costs and risks (53%), while architects and interior designers are prioritising better communication (50% and 35%, respectively) with clients and teams. Improving the sales process ranks among the top three investment areas for all groups.

Additional insights from the 2026 UK State of the Industry: 

● Rising costs continued to pressure firms: Higher costs remained widespread across the sector in 2025. The vast majority of design and build firms (90%) and architects (86%) report an increase in the cost of doing business in 2025, along with over two-thirds of interior designers (68%).

● Key drivers of higher operating costs: Among firms reporting higher expenses, product and material costs remain the leading driver (52%), followed by advertising and marketing costs (40%) and software expenses (30%).

● Client acquisition remains a top challenge: Beyond cost inflation, attracting new clients weighs heavily on firms. Difficulty finding prospective customers is the most frequently cited challenge across sectors, reported by 55% of design and build firms, 50% of interior designers and 48% of architects.

● Workforce growth has slowed considerably: The share of firms reporting staff increases fell from 15% in 2024 to 9% in 2025. At the same time, nearly three-quarters of firms (72%) report no change in staffing levels, up from 60%. Less than 1% of interior designers or design and build firms report increasing headcount in 2025, while only 15% of architects added staff.

The complete 2026 Houzz UK State of the Industry report can be found HERE.

*The Houzz UK State of the Industry was conducted among home renovation firms in the Houzz UK community that offer services related primarily to residential renovation and/or design. The study was fielded in January 2026. N=145.