Houzz, the online platform for home remodeling and design, released its 2025 State of the Industry Report last Friday, providing a mixed outlook for roofing contractors and those involved in exterior construction, such as siding, windows, and outdoor projects. 

The report's data is derived from an annual survey conducted by Houzz last fall and includes feedback from 1,537 companies across seven industry categories, including general and specialty contractors. 

While the report indicated that the residential housing sector experienced a revenue decline in 2024, optimism remains high for 2025, with expectations of double-digit growth for both specialty and general contractors.

Industry Optimism Despite Challenges

Last year was challenging for survey respondents, with construction firms in all categories reporting revenue declines. 

Specialty contractors, including roofing professionals, saw a 2.8% decrease in revenue, down from an 8.1% increase the previous year. General contractors fared slightly better, with only a 0.3% drop, compared to a 7.7% increase in 2023.

Profitability also took a hit, with slightly more than half of specialty contractors (51%) reporting a decline in profits. 

Increasing materials and labor costs ranked as significant contributors to reduced profits. In 2024, roofing and exterior contractors faced substantial challenges due to rising expenses. 

The report reveals that 75% of specialty contractors identified materials as their primary cost driver, with business insurance and employee wages not far behind.

Still, roofing and exterior construction contractors are among the most bullish groups going into 2025. Nearly 73% of specialty contractors — many of whom are engaged in roofing, siding, and exterior renovations — report a positive business outlook for 2025. 

General contractors overseeing larger-scale exterior projects also show strong confidence, with 61% anticipating growth.

Expectations of increased demand, economic growth and a renewed focus on exterior home improvements are driving the optimism. 

The report highlights that more than half of construction firms predict increased revenue and profits, with specialty contractors leading the charge at 72% and 64%, respectively.

Combatting Cost and Labor Pressures 

Looking ahead to 2025, cost pressures are expected to persist as more than half of construction firms, including general (58%) and specialty contractors (56%), anticipate continued increases in product and material costs. 

Labor availability remains an ongoing concern, with more firms expecting shortages rather than improvements. That sentiment tracks with estimates from independent reports by the Bureau of Labor Statistics and Associated Builders and Contractors trade group: the consensus is that nearly 500,000 construction jobs will remain unfilled in 2025. 

And, along with the Trump Administration’s tariffs against Mexico and Canada waiting in the wings, the crackdown on migrant labor has put greater pressure on an already overstretched labor force. 

Many firms are investing in technology to combat rising costs and improve efficiency. In 2024, about 37% of specialty contractors used software for estimating costs or bids, and more are expected to adopt digital tools in 2025.

General contractors also increasingly rely on accounting, invoicing, and project management software to streamline operations.

Key Strategies for Growth

To meet revenue expectations in 2025, roofing and exterior contractors are adopting several strategies:

• Targeting high-budget projects: 62% of specialty contractors and 56% of general contractors aim to attract larger contracts.
• Raising prices: More than half of specialty contractors plan to increase markups and margins.
• Improving sales processes: 42% of specialty contractors and 44% of general contractors will focus on refining their sales approach.
• Expanding service areas and offerings: Some firms are broadening their geographic reach and introducing new products or services.

How Do Houzz and RC’s State of the Industry Stack Up?

The "Roofing Trends in 2025" portion of Roofing Contractor's annual State of the Industry Report reinforces many of the trends identified in the Houzz study. 

The findings highlight how technological innovations — including drone use for roof inspections and sophisticated project management software — will revolutionize daily operations. The Houzz report mirrors this focus on technology.

Moreover, both sources highlight persistent challenges. The Houzz report identifies rising material costs (cited by 75% of specialty contractors) and labor shortages as significant concerns. At the same time, Roofing Contractor similarly warns of increasing supply chain pressures and a tightening labor market. 

Both reports advise that these challenges will likely continue into 2025, prompting contractors to explore strategies such as targeting high-budget projects and refining their sales processes to offset cost pressures.

Another point of convergence is the call for diversification. Roofing Contractor’s findings underscore the importance of broadening service offerings — especially in sustainable and energy-efficient roofing solutions — to meet evolving market demands. 

While the Houzz report does not explicitly highlight sustainability as a separate trend, its findings regarding strategic growth suggest that numerous firms already emphasize higher-value projects and broader geographic regions. This corresponds with the movement toward more innovative and eco-friendly solutions.

The Takeaway

The robust methodology behind the Houzz report lends further credibility to its insights. The report offers a comprehensive forecast by collecting self-reported data from a broad spectrum of industry participants and adjusting projections based on historical trends and current market conditions. 

This approach, when compared with the industry-specific analysis from Roofing Contractor, creates a clear roadmap: technology adoption, strategic diversification, and careful management of rising costs are key to thriving in 2025.

The Houzz and Roofing Contractor reports, taken together, illustrate an evolving industry: Roofing and exterior contractors must invest in cutting-edge tools, optimize their operations, and pursue bigger, more lucrative projects despite facing unavoidable challenges with material costs and labor shortages.  

For contractors, these converging insights offer a robust blueprint for navigating the uncertainties of the current market and capitalizing on opportunities as the industry evolves in 2025 and beyond.

With robust demand, strategic growth plans, and heightened technology utilization, contractors can manage persistent cost and labor issues while seizing market prospects.