The American Society of Interior Designers (ASID) has released its 2025 Economic Outlook report, revealing an uneven growth forecast for interior design services as the industry navigates high interest rates, rising material costs, and widespread tariffs that are reshaping market demand.

Despite moderate growth in consumer spending and employment, the report identifies significant headwinds, including labor shortages in the construction sector, a pause in infrastructure funding, and elevated housing prices. These factors are forcing designers to adapt strategies and identify emerging opportunities in sectors like adaptive reuse projects and aging-in-place design solutions.

"As the economic landscape evolves, it presents new opportunities for the interior design industry to innovate, diversify and grow," said ASID CEO Khoi Vo. The report, authored by economist Bernard Markstein, Ph.D., and ASID Research Fellow S. Dawn Haynie, Ph.D., provides sector-specific forecasts to support strategic planning across the design industry.

Key findings reveal mixed conditions across different markets. Office vacancy rates are improving modestly as return-to-office policies take effect, creating renovation opportunities, though new construction remains limited. The hospitality sector faces uncertainty with many hotels needing renovation but economic pressures slowing activity, while conversions of outdated hotels into housing gain momentum.

Healthcare construction faces particular challenges with federal funding on hold, leaving state and local governments to bridge gaps and resulting in slower growth. Meanwhile, high home prices and interest rates continue dampening single-family housing demand, though build-to-rent and senior living communities show increased development activity.

The report identifies promising opportunities in restaurant renovation and adaptive reuse of retail spaces into mixed-use developments, despite broader retail sector pressures. Immigration restrictions are expected to further tighten already widespread construction labor shortages.

While the baseline forecast avoids a full recession, tariff-driven inflation, labor costs, and interest rates continue weighing on construction activity and capital investment, emphasizing the need for industry agility and strategic adaptation.