Industry Trends
Marketing Insights
Written By
Matt Wadley
Content Marketing Associate Director
Design & Construction Week 2026 offered more than access to new products — it provided a glimpse into where the housing market is headed. During the trade show, we connected with Robert Dietz, chief economist at the National Association of Home Builders, to get the inside track on current trends.
As the NAHB helps guide the U.S. residential construction industry, the organization’s insights set the tone for builders and developers nationwide. With 2025 behind us, Robert breaks down why cautious optimism is shaping 2026 and highlights which strategies the top players are using to stay ahead.
What is the biggest misconception industry leaders have about the housing market right now, and what should they actually be watching?
Robert Dietz: While 2025 was a down year for single-family building, if you look closer, there were a lot of bright spots. We saw gains in custom homebuilding and townhouse construction, and the remodeling market continues to expand.
So there are some pockets of softness. Some areas where inventory has risen too quickly. There’s a lot of potential demand on the market that needs to be met. And that means additional housing supply.
Is there a trend getting more attention than it deserves, or a “quiet” signal we’re missing?
Robert Dietz: People are not talking enough about how down payment requirements are the binding constraint on people being able to purchase a home. There’s a lot of focus on the monthly housing payment and high interest rates — and an expectation that those rates will move lower — but what we really need to see is progress on savings and for people to be able to purchase a home.
We do see some good news: Income growth should be higher in 2026. Productivity growth is coming, which means buyers are able to save a little bit more and meet that down payment requirement.
Builder sentiment ended 2025 on a negative note, yet economic indicators are showing signs of life. How do you reconcile that?
Robert Dietz: There is weakness in the market right now, which is partly connected to the fact that 2025 was not a great year for the labor market. In fact, the full economy only created 180,000 jobs last year, marking the weakest performance for a non-recession year since 2003.
As a result, builder sentiment is a little cautious heading into 2026. The overall index is in negative territory, which means builders are approaching the market with a bit of risk aversion and trying not to oversupply the market.
But there are some internals that offer good news. A good example of that is the future sales expectation, which have actually shown gains in terms of future sales several times in recent months. So the way we’ve been characterizing builder attitudes at this show is “guarded optimism.” The belief is that we will see some small gains in single-family construction, but a certain number of things have to occur in the positive direction for buyers to return to the marketplace.
We’re seeing a “lock-in” effect with interest rates. How is that impacting homeowner behavior and renovation?
Robert Deitz: One of the results coming out of the show is how positive remodelers are about the market — and that’s kind of an unusual situation because existing home sales activity has been weak and the mortgage rate lock-in effect means homeowner mobility is low. But what’s happening is those homeowners are staying in their homes and gaining more home equity.
There’s $36 trillion of home equity in the market and that means you’ve got a lot of homeowners who are willing to reinvest in their homes. So we are seeing increases in exterior remodeling, interior remodeling and — the big one — aging-in-place–related remodeling activity.
We’ve got about a 2% to 3% growth rate in the remodeling sector next year. And we think over the next 10 years the remodeling market’s actually going to grow by about 30%. So that’s a real growth sector within residential construction.
Policy is a hot topic right now: What will actually move the needle on affordability?
Robert Dietz: There’s a lot of focus on housing policy right now. In fact, I would argue policymakers in Washington are focused more on housing policy than at any time since the 1960s. So policymakers on the left and the right are looking at demand-side incentives to try to bring buyers to the market.
The ultimate solution to the housing affordability crisis we face — and the housing deficit that we think is estimated at a shortfall of 1.2 million homes — is supply-side policy improvement. We need to encourage workforce development. We need to reform zoning laws. We need to bend the cost curve for builders in the right direction, and that will yield more attainable single-family and multifamily housing on the market. That’s the ultimate solution. The problem is it’s going to take a few years to actually have an impact.
Looking ahead, what is the single biggest factor that will influence the market in 2026?
Robert Dietz: For 2026, the biggest economic factor that could affect housing demand is going to be productivity growth in the labor market. Productivity growth is the closest thing you can get to a free lunch in economics. Higher productivity growth means downward pressure on inflation, which means the Fed can continue to cut interest rates. It means upward pressure on wages, which means incomes grow and that improves housing affordability conditions.
It does mean a little bit of structural unemployment. We think about AI and job losses in the office sector. But dynamic economies can reutilize workers, particularly in sectors like construction where we have a labor shortage. So I would watch labor productivity. And of course we are watching the 10-year treasury rate, where we should see some downward pressure, which will reduce the 30-year fixed-rate mortgage. Overall, those factors may mean a slight improvement in housing affordability in 2026.
