The UK residential construction and design sector enters 2026 on uneven footing, according to the 2026 Houzz UK State of the Industry report. While optimism is climbing among architects and interior designers, design and build firms remain more cautious, reflecting the varied experiences of 2025.
Architects and interior designers are showing renewed confidence, with 55% and 54% respectively reporting a good or very good outlook for the year ahead — a significant jump from 33% and 45% in 2025. By contrast, only 32% of design and build firms are similarly upbeat, with nearly half expecting a challenging year.
“The outlook for 2026 is far from uniform across the industry,” notes Marine Sargsyan, head of economic research at Houzz. “Architects and interior designers are more optimistic than last year, but design and build firms continue to navigate uncertainty. Rising costs and fluctuating demand are driving many to focus on efficiency and stronger sales strategies.”
Revenue and profit trends signal gradual recovery
Although 2025 was tough for many, the report highlights signs of easing pressure. Revenue growth is picking up, with 38% of businesses reporting increases (up from 34% in 2024) and revenue declines slightly down to 45% (from 47%). Profitability also shows modest improvement: fewer firms reported losses (47% vs 62% in 2024), while 27% recorded higher profits.
Operational priorities for 2026
Across the sector, firms are investing in efficiency and operational improvements. Streamlining processes is top of the agenda, with 65% of design and build firms, 57% of interior designers, and 56% of architects dedicating resources to productivity.
Design and build firms are also prioritising cost and risk reduction, while architects and interior designers focus on enhancing client and team communication. Refining the sales process emerges as a priority for all groups, reflecting the need to win new business amid persistent market challenges.
Rising costs, client challenges and staffing trends
Costs remain a major pressure: 90% of design and build firms, 86% of architects, and 68% of interior designers reported higher operating expenses in 2025.
Key drivers: Material and product costs top the list (52%), followed by marketing (40%) and software expenses (30%).
Finding clients remains a central challenge, with 55% of design and build firms, 50% of interior designers, and 48% of architects citing difficulty attracting new customers.
Staffing growth slows: Only 9% of firms added staff, compared to 15% in 2024, while 72% reported no change in headcount.
Houzz Pro: Supporting the UK Design Community
Houzz Pro, the leading all-in-one software for home construction and design, continues to empower professionals with project management, CRM, estimates, takeoffs, selections, 3D visualisations, and client collaboration tools. More than 3 million UK and global professionals, from architects and interior designers to home builders and design and build firms, rely on Houzz to manage projects efficiently and profitably.
The full 2026 Houzz UK State of the Industry report is available online.