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Every day, The Farnsworth Group team is on the phone with manufacturers, suppliers, retailers, and channel partners across the building products, home improvement, and lawn and garden space.  

What we are hearing is consistent: the optimism that carried many companies into 2025 has been replaced by something more grounded. Acceptance. Grant Farnsworth and Eric Voyer recently sat down for a Shop Talk session to work through the forces we believe matter most right now. It’s important to note, that we’re in a more dynamic market than in recent history which changes week-to-week.  

Here is what we covered.

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1. The Conflict in Iran

The Farnsworth Group does not take a political view on the events unfolding in Iran, but as market analysts we track the downstream implications to our industry - and there are real ones worth paying attention to.

• Crude oil spiked to $116 per barrel, sending an immediate signal to markets and consumers alike.

• Gas prices are up roughly 25% since January 2026. Diesel is up approximately 40% - and diesel is the number that matters most for our industry.

• A 40% increase in diesel costs creates hard decisions across the supply chain. Do you ship when the truck is only half full? Run the heavy machinery now or later? How long do we wait to put our product on a ship?  Those trade-offs are happening now.

Implication: Beyond direct costs, the confidence effect matters. Uncertainty at the geopolitical level ripples into consumer and business decision-making in ways that are hard to quantify but easy to feel.

2. Mobility Rates

Household mobility hit a record low in 2024. Fewer than 12% of U.S. households move each year. Twenty years ago, that number was close to 16%.

• Applied to roughly 92 million single-family households in the U.S., that difference represents more than 3.5 million fewer household moves per year. Those are real transactions and real product purchases that are not happening.

• Movers historically spend more on home improvement. You fix up a home before you sell it and you remodel after you buy it. That transaction-driven spend is compressed right now.

• Even so, home improvement spend has grown over the past two decades as mobility declined. The old model - that you need movers to drive HI spend - has been challenged by the data.

• The 6% 30-year mortgage arrived and we did not see a meaningful uptick in home purchase contracts. Refinancing followed, not buying.

Implication: If your company is waiting for mobility to return before making strategic moves, reconsider that posture. The customers are there. They are just not moving. You must consider how you can find and connect with the new homeowner paradigm.

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3. First-Time Homebuyers

The first-time homebuyer story is closely tied to mobility, but it deserves its own conversation.

• In the past four years, we have seen the fewest first-time buyers in 25 years of data. According to NAR, the average age of a first-time buyer is now 40. The average subsequent buyer is 62.

• Waiting from age 30 to 40 to buy costs approximately $150,000 in lost home equity. Given that the home is the largest asset most homeowners will have, this is real wealth a generation of buyers is not accumulating.

• A 40-year-old first-time buyer will likely own two homes in their lifetime, not four or five. What they invest in, improve, and defer looks very different from the first-time buyer of previous generations.

• On the other side, a 40-year-old first-time buyer typically has more disposable income than a 28-year-old would. The purchase triggers and category priorities shift accordingly - think OPE, appliances, and categories you acquire when leaving renting behind.

Our industry needs to engage this buyer differently. The research is pointing that way, and we will be exploring it further in the coming months.

4. Jobs and the Labor Market

The February 2026 jobs report showed a loss of 92,000 jobs - well below the 60,000 gain economists had expected.

• Over 108,000 job cuts were announced in January alone, the highest January total since 2009. Much of this reflects pandemic-era overhiring being corrected, not purely AI displacement - though AI is a factor.

• The result is limited wage growth. We have come down from a peak of 5-6% to approximately 3.5-4% today.

• Our team has found a very high correlation between disposable income and home improvement spend. When groceries, gas, and healthcare all cost more and wages are not keeping pace, that disposable income bucket shrinks - and HI spend follows.

The K-shaped economy is real and supported by our data. Consumers at the top are continuing to spend. For everyone else, value and justification matter more than ever.

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5. Tariffs

Tariffs - the noise that never quite goes away.

• According to the New York Fed, approximately 11% of tariff costs are passed through to consumers. The remaining 89% is absorbed across the supply chain - by manufacturers, exporters, importers, and retailers.

• Everyone in that chain is being squeezed. Retailers are pressing manufacturers not to raise prices. Homebuilders are facing the same pressure from buyers who are already stretched.

Implications: Even if tariff pressure eases, do not expect prices to fall. A manufacturer who has been absorbing costs is not in a position to hand back an 11% discount voluntarily.
The full downstream impact has likely not been fully realized. Expect more of it to surface over the next 3 to 12 months. The harder question is which product categories absorb first, and which trigger a broader pricing spiral. That remains unresolved.

6. AI and the Data Center Boom

AI generates a lot of conversation, but one of the most concrete implications for our industry is on the construction side.

• Data center construction spend exceeded $40 billion in 2025 - up nearly 400% since 2021. Office construction has declined at a similar rate, creating a meaningful offset in the nonresidential market.

• For suppliers in the right categories, data centers are the bright spot in an uncertain nonres environment. Underground construction, HVAC and cooling systems, and electrical infrastructure are all seeing real demand.

• These facilities are not major job creators long-term. One report cited approximately one job created per $1 million in subsidies - a $100 million data center hiring 10 people.

• Data centers require ongoing maintenance, efficiency upgrades, and system improvements, so this is not purely a build-and-done demand spike.

Implications: The tech arms race between major players is real and it is driving construction activity that benefits the commercial segment of our industry today.

7. Synthetic Respondents in Market Research

This topic is specific to how our clients are commissioning and evaluating research - and it matters.

• Synthetic respondents are AI-generated personas used in place of real survey participants. Vendors are actively marketing them as faster and cheaper alternatives to primary research.

• Chris Chapman, PhD, Director of the Quant UX Association, has articulated several foundational problems such as:  

• There is no way to prove in advance that LLM data will be good enough for any specific research question.  

• The fundamental concepts of statistics - sampling error, confidence intervals, representativeness - do not apply to LLM outputs, because LLMs do not constitute a population.

• LLMs are people-pleasers. They are trained to be agreeable, which means they tend to tell you what you want to hear rather than what your customers actually think.

• There are legitimate use cases - particularly where no prior data exists, such as a truly new product or brand. In those exploratory contexts, they can be a useful tool.

Implications: For established research questions, synthetic respondents measure the model's priors, not the market. At TFG, we are evaluating this technology carefully and will continue to track its development.

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8. The ROAD Act

The 21st Century ROAD to Housing Act passed through the Senate.  

• For perhaps the first time in recent memory, housing affordability has achieved something close to bipartisan consensus. The acknowledgment that attainability is a national crisis is meaningful, even if the solutions remain contested.

• There are real positives in the bill: deregulation provisions, a path for modernizing modular and manufactured housing, and expanded ADU financing options.

• The investor acquisition ban - restricting institutions owning 350 or more single-family homes from buying additional units - is generating headlines, but institutional investors represent roughly 3% of the single-family rental market. The gesture is more symbolic than structural.

• The bill is primarily a policy and incentive vehicle, not a funded program. Zoning reform depends on voluntary local action, and that moves slowly.

Implication: This is not a near-term demand catalyst for 2026. It signals a policy direction worth monitoring closely.

9. M&A Activity

The consolidation at the distribution and retail level is one of the most consequential structural shifts happening in the building products channel right now.

• QXO has acquired both Beacon Roofing Supply and Kodiak Building Partners. Lowe's has acquired Foundation Building Materials and Artisan Design Group. Home Depot has acquired GMS, SRS Distribution, and International Design Group.

• The common thread is the Pro customer. Every one of these moves is oriented toward solving logistics challenges, reducing contractor friction, and capturing a larger share of the professional trade market.

Implications : The capital funding this activity is not exhausted. This consolidation is not done.
For manufacturers, this cuts both ways. Getting swept into a larger distribution ecosystem can mean overnight national reach you could not have built independently. But it also means negotiating with an increasingly concentrated and sophisticated buyer.

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10. Manufacturer Sentiment

We talk to a lot of manufacturers. Here is what we are actually hearing.

• The hopeful optimism of 2025 has given way to acceptance. This is a flat market. Gains, where they exist, are likely inflationary rather than unit volume growth. That reality may persist into 2027.

• The pressures are stacking: tariff cost volatility, demand uncertainty, channel pressure to absorb costs rather than reprice, and inventory timing questions.

• Pricing and profitability are top of mind. A broader range of price points - Good, Better, Best applied with sharper discipline - is becoming a survival strategy, not a nice-to-have.

• The bright spot is the luxury and high-end market. Whether you frame it as a K-shaped or E-shaped economy, consumers at the top end are still spending. If your product category plays there, you are more insulated than most.

Implication: Assortment and segmentation is the response strategy gaining the most traction in our client conversations. Do you have the right products for the right customers at the right price? That question is more consequential in 2026 than it has been in years.

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Connecting the Dots

What makes 2026 genuinely challenging is not that any one of these forces is unprecedented. It is that they are all in play at the same time. Our industry is becoming accepting - if not weary - of uncertainty.

Geopolitical conflict is adding cost and uncertainty. Mobility rates and first-time buyer dynamics are reshaping who the home improvement customer is. A softening labor market is compressing disposable income at the exact moment that energy costs and tariff pass-through are drawing from the same budget. And channel consolidation is changing the rules of engagement for manufacturers already navigating all of the above.

The companies we see competing well share a few things in common. They are not waiting for conditions to improve. They are investing in understanding who their customer actually is right now. They are building pricing strategies with flexibility. And they are paying close attention to which parts of the market are still spending - and making sure they have a credible way to be there.