The custom home building industry is entering 2025 on a high note, with increased confidence and expectations for improved business activity, according to the Q1 2025 U.S. Renovation Barometer from home design and remodeling platform Houzz.
The barometer, which takes into consideration survey responses from more than 1,000 home professionals, shows most businesses are feeling optimistic that consumer demand will continue on its upward trajectory in 2025.
“Strong Q4 performance and recent federal interest rate cuts have bolstered confidence among industry professionals as we enter the new year,” says Marine Sargsyan, Houzz staff economist. “With this solid foundation, construction firms are expressing the most positive sentiment we’ve seen for the sector in two and a half years. Confidence levels also remain high among architects and interior designers as new committed projects continue to reinforce demand expectations, though optimism among this sector has softened slightly.”
Confidence in the Construction Sector Hits New Levels
The construction sector is particularly optimistic about business activity in 2025. Houzz's Expected Business Activity Indicator—a measure of project inquiries and new committed projects—rose to 65 in Q1 2025, its highest level since Q3 2022. According to the report, project inquiries jumped 10 points to 69, while new committed projects dipped just slightly by two points to 62.
Build-only remodelers and design-build remodelers share a similarly positive outlook, with their business activity indicators climbing to 65 and 66, respectively.
This confifence in business activity has been building for some time. In Q4 2024, Houzz's Recent Business Activity Indicator also showed improvement, climbing seven points to 54. This growth was fueled by a 14-point increase in project inquiries, brining it to 60 points. Meanwhile, new committed projects held steady at 48.
Design Pros Remain Optimistic—But Less So
The architectural and design services sector remains positive, though slightly less optimistic than construction professionals. The Expected Business Activity Indicator for design and architecture professionals fell by three points to 68 in Q1 2025. This decline was driven by a seven-point drop in project inquiries, bringing it to 66 points, while new committed projects remained at 69 points.
Architects reported a 12-point dip in their indicator to 65, but interior designers anticipate stronger business activity, with their indicator rising 11 points to 72.
Looking back, the home design industry’s Recent Business Activity Indicator increased to 58 in Q4 2024, up from 54 in Q3 2024. Architects reported a modest one-point increase to 61 points, while interior designers experienced a mcuh more substantial 10-point rise to 53 points.