I was seeing the same thing. Watch is on 7.1, Phone is on 14.2. I saw elsewhere in this issue the advice that I should open HomeKit on the watch and select a device that wasn't responding. I noticed that none of the devices were responding. I left the HomeKit app open on my watch while I was trying to figure it all out and noticed that one of the devices was finally "found" and so were all the others after a few minutes. When you open HomeKit on the watch, to the left of the time, there is a small circular animation that, I believe, illustrates that all the devices are being refreshed. It took a few minutes for it to stop. Now when I open HomeKit on the watch the animation runs for about 20 seconds and stops but it appears that all the devices are found.
I look forward to Apple correcting the bug.