The current economic situation is currently putting a strain on individuals and industries across the United States, which has a direct impact on the housing market and for the manufacturing sector.  

Based on a variety of indicators, 2026 may feel similar to 2025, with incremental growth anticipated in many categories as incomes struggle to keep pace of inflation, disposable income remains low, as rates ease closer to levels that stimulate activity. Gains may once again come from cost increases and less from unit increases.

In order to prepare adequately, both for 2026 and beyond, building products and home improvement manufacturers must gain insight into emerging market trends and the current attitudes and behaviors of customers—both DIY homeowners and industry professionals alike. That will enable your product development, channel, and marketing teams to plan accordingly and make adjustments to account for factors impacting product selection.  It will also equip your teams with the necessary intel to best position your products in annual line reviews.

What to Include in Your 2026 Strategy

As your internal teams strategize about product development, marketing efforts, and channel selections for the upcoming year, our team at The Farnsworth Group recommends you make the following measures a priority:

• Understanding current demand and what is impacting opportunities
• Updating your merchandising strategy amid ongoing price sensitivity
• Focusing on nurturing brand loyalty in a slow growth market
• Investing in understanding customer usage & attitudes: who is buying, how, where, why

Let's dig deeper into why these four focuses should be core to your go-to-market strategy and the efforts of your teams. 

1. Understand Where Demand is Coming From in 2026 and Beyond

A significant portion of demand is coming from maintenance and repair activities on existing housing stock, and all indicators continue to point towards repair-and-remodel driving building product sales in 2026 as well. 

The current market conditions are still facing a degree of uncertainty such that depending on your product category and customer you may hear a range of views and predictions. Spend enough time, and you'll likely hear various housing market commentators support conflicting cases using similar data. 

So, what should you trust? We look at various market factors, and from those fundamentals, our position has been, and remains, that the existing home market and contractor segment represents opportunity for growth amid new single family construction constraints. 

To begin with, housing demand remains intact. Household formations have slowed in recent months but were relatively strong most of 2025. Slowed growth in household formation is related to affordability challenges. However, the average age of the first-time homebuyer is now 40 years old according to the National Association of Realtors, meaning a large portion of the Millennial generation is yet to hit the median first-time homebuyer age. Future home buyers are waiting in the wings.  

The National existing supply of resale homes is still only about a four-month supply, relatively constant compared to the past two years, based on data from the U.S. Census Bureau and the National Association of Realtors (NAR), but higher than the two- to three-month lows experienced for much of 2023 and 2024. Inventory remains highly regional or MSA based as we see certain markets with increasing supply and therefore declining home values. 

In contrast, the National supply of new homes is at a roughly seven-month supply, down from the 10-month spike in 2022. Higher new home inventory creates more aggressive tactics to move inventory and may cause builders to defer new starts.

Our New Construction and Remodeling: Industry Drivers and Forecast report also shows that houses are spending more time on the market, but still below pre-pandemic levels.

The Housing Affordability Index, which measures whether a typical family earns enough to qualify for an average home, remains at the lowest levels seen for the past 20 years, according to the National Association of Realtors (NAR). Because affordability is low due to high home prices, higher rates, and with the decline in consumer confidence throughout 2025 and into the start of 2026, housing stock is not moving as it was in years prior—particularly 2020 and 2021. 

As of the end of Sept. 2025, 52.5% of homeowners with mortgages had interest rates below 4% (down from a record 65% in Q1 2022 and the lowest since Q4 2020). The number of mortgages outstanding with rates below 4% has been declining as more of the mortgages get paid off and recent home buyers take on higher rates. About four-fifths of mortgage homeowners have a rate below 6%, down from a record 92.7% in the second quarter of 2022. 

However, nearly 40% of homeowners are without a mortgage, an all-time high. That, combined with high home equity, represents a more mobile segment better insulated from high rates and less impacted by affordability concerns. Rising housing inventory suggests the lock-in effect is beginning to loosen, yet many buyers hesitate to make a move until mortgage rates fall under 6%.  

Looking ahead to what’s in store for 2026 and beyond, this dynamic may change ever so slightly, with some small basis point decreases rolled out iteratively by the Fed. As a result of these inflation-cooling measures, the pool of available home buyers is also anticipated to remain tight until the cost of debt declines and more individuals and families are able to qualify for a mortgage. 

Meanwhile, the national median home is now more than 40 years old, national equity is at record highs, and fewer people moving.  In fact, mobility rates have been declining for 10 years hitting a new low 2024 according to Harvard's Joint Center for Housing.  With mobility getting close to 8% of the population each year, down from nearly 16% in 2006. This has paved the way for increased maintenance, upgrades, and efficiency improvements. History shows that remodeling, repair, and replacement categories are less volatile than new construction in uncertain or sluggish markets.

With more homeowners staying put and substantial equity in their homes from large home value gains from 2020 to today, individuals will continue to turn to contractors and home improvement professionals to complete larger renovation projects to make their home compatible with their evolving lifestyle and what they desire for the next phase of their life.

2. Update Your Merchandising Strategy

A strong merchandising strategy is made up of three primary components: What you should make, where you should sell it, and how you should price it. Generally speaking, building product manufacturers that address availability constraints, while reducing internal costs to stabilize retail prices, and offer clear value propositions are able to increase market share.  A key reason for this is the current budget sensitivity of homeowners and their reduced confidence in spending on high dollar projects or products. This market reality is expected to continue throughout 2026. 

Consumer confidence has weakened and expectations have softened considerably over the past year, to levels not seen decades. This is due to a combination of factors, from the rising cost of living and inflation to uncertainty surrounding the United States’ volatile trade policy and fears of recession. Lower confidence often results in lower spending among consumers when it comes to investing in remodeling or home buying. Currently, about three-fourths of customers believe it’s a bad time to buy a home.   

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"When conducting strategic planning for 2026, your teams need to continue evaluating internal pricing strategies and create appealing product mixes of good, better, best options at different price points. This breadth of SKUs will ensure your customers who are industry professionals have a wider variety of options as they face budget-sensitive customers." - Grant Farnsworth, President of The Farnsworth Group

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We've heard over and over during our market research studies in recent years that homeowners and contractors alike made changes to product, project, brand, or supplier because of pricing and availability pressures. That $100K remodeling project became a $75K project because of rising costs to borrow money and inflationary pressures on budgets. Homeowners have continued citing the cost as the biggest challenge with their home improvement, maintenance or repair project, much more than other challenges, such as project timelines, finding a contractor, or product knowledge.

We've tracked this topic since 2023 and continue to do so in our Quarterly Homeowner Activity Tracker. What we found is that intent to complete home improvement projects costing less than $5,000 has remained strong quarter over quarter despite. This is true across different generation and income demographics. This makes sense given that repair and maintenance projects are driving a large share of building material sales currently. 

Many homeowners (particularly those not in the luxury market) are having to make concessions and that is putting contractors on their back foot to really focus on cutting material costs or provide options to win the project bid and keep their businesses running at a decent profit margin. 

Additionally, customers are looking for options that "better" but may hesitant to splurge on the “best” option available to them without having a compelling reason to do so. Look at your Product Development pipeline. Make sure you understand which features are critical, versus which are value-add features that can command a premium. 

Your next move should be to provide SKUs that cover your bases from good, to better, and best at varying price points. Use custom market research on your unique customer base to find out directly from them what they value and how much by letting that data inform your merchandising and pricing practices in 2026.  In a low growth market, taking share is the key for growth.  Value propositions with clear benefits that align with customer needs will be critical for success. 

Once you have these data-based insights, use them to your advantage in product line reviews.  Suppliers are demanding more and more that you be the category captain and come to any review armed with information to support your case for increased shelf space, or a reason to promote your brand over another.

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One other note: Focus your sales forecasts on unit sales rather than dollars to benchmark your performance metrics.

3. Work to Reduce Brand Switching Among Customers, Especially Pros

As homeowners remain budget sensitive and demand becomes more selective, contractors are experiencing increased competition among each other for available jobs. This may compress margins, extend bid cycles, and create revenue uncertainty-even for firms with solid backlogs. 

A majority of contractors anticipate that the home improvement market will grow in the next 12 months and that their revenue will grow, based on findings in our Quarterly Contractor Activity Tracker, prepared with the Home Improvement Research Institute (HIRI). They are not as optimistic as they were at the end of 2024, but sentiments were gradually improved throughout 2025. Looking ahead, all signs point toward cautious optimism as competitive pressure increases, with efficiency, technology and sustainable materials being primary drivers of growth.  

In this competitive environment, your goal is to maintain your customer base despite ongoing levels of brand switching behaviors among pros and homeowners through 2026 as well.

Brand shifting has been a trend over the past few years – both among DIY homeowners and industry professionals – driven by budget, availability, and quality. They are also using multiple suppliers and multiple buying methods, both online and in-store, based on our 2026 Building Products Customer Guide. And when pros do decide to switch to a new supplier, it’s often because the new supplier has the products they need in stock, better prices, and better delivery options. The opportunity for you? Nailing that perfect mix of in-store convenience and online flexibility to meet the evolving needs of home builders and remodelers.

Building product manufacturers and home improvement suppliers should focus on quality, reliability, and product variety in their messaging to increase loyalty among pros. It’s about value propositions and options in a tighter, more competitive market, where buyers are more budget-sensitive. Make sure your online presence delivers and reiterates what’s in stores, and meet your customer where they are by allowing options on how to purchase.

Different product categories are expected to grow at different rates. For specifics on your product category, we recommend you become a member of The Home Improvement Research Institute (HIRI), which makes product category specific size of market forecasts available to its members multiple times per year. Learn more >

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Your Product and Channel teams should be working to refine your SKU mix to cover good, better, and best options to help prevent your homeowner and Pro customers from switching brands and making it more logical for them to remain loyal to your brand within their project’s budget constraints. 

To this end, your Brand and Marketing teams should be working to understand your Brand Health. This is feedback from product buyers that provides your organization with critical metrics on brand awareness, consideration, use and perceptions. By tracking your Brand Health over time, you’ll be equipped with insights needed to know where you must focus in the sales funnel, and what changes may be needed to drive loyalty.  This may be marketing spend to create awareness or service elements that drive loyalty and preference.

4. Continually Invest in Understanding Your Customers

The worst kind of scenario you face is losing market share because of a lack of information, which leads to taking the wrong actions and losing relevance among your customer base. Remember, it can take decades to recover market share that was lost over just a year or two, so tread carefully. 

As you compete in 2026, you want to make sure your dollars are well spent, and that means investing them in specific activities based on reliable data and insights. You need to hear directly from your customers about which resources they use to conduct project and product research specific to your category during their path to purchase. 

Use the information you have gathered that sheds light on customer product uses, attitudes toward the project and product, and purchase behaviors to prepare your product roadmap, distribution strategy, marketing communications, and media investments for 2026. Know who to target, what to say to them, where to say it, and when to say it. 

Also, understand that, as they have been for over a year now, consumers are still suffering a lack of confidence because of uncertainty regarding the economy, high mortgage rates, and the cost of home improvement materials among other cost-of-living increases. What you communicate and how based on what is impacting their behaviors in the current environment is critical for maintaining and gaining share in competitive markets.

Qualitative and quantitative customer usage and attitude (U&A) research will provide you with this information. We recommend you first lean into qualitative research to understand more deeply what is influencing customer behaviors, especially as market conditions are shifting. This should be followed with Quantitative research to validate finding and provide statistical relevance of various activities.

What are the Next Steps for Your Teams to Advance Sales in 2026?

To keep products moving this year and next, building products, home improvement, and lawn & garden companies will have to compete for market share and present a strong value proposition to more price-sensitive customers. 

If you are plagued with questions about what’s going on in the mind of your customers, how your brand health is fairing, and what kinds of markets you should be targeting to achieve YoY company growth, our research team at The Farnsworth Group can help. 

For nearly 40 years, manufacturers and suppliers in the building products, home improvement, and lawn & garden industries have trusted our primary research team to gain deep insights in their customers’ behaviors, their go-to market strategy opportunities/risks, and their overall market presence.