Hardware, Plumbing & HVAC Distributors NAICS 4237

Jan 22, 2026 - Contractors Temper Their Expectations for 2026

• Contractors are entering 2026 with subdued expectations as economic uncertainty, tariffs, immigration enforcement, and persistent labor shortages weigh on confidence, even as demand for data centers and power projects remains strong. The Associated General Contractors of America’s latest outlook shows contractors are optimistic about data center growth, with 65% expecting the market to grow. Still, contractor sentiment regarding education, lodging, office, and retail construction all declined sharply compared to last year. Many firms report project delays or cancellations due to financing challenges and rising material and labor costs, and more than 80% struggle to fill both craft and salaried positions. Despite these pressures, most contractors still plan to expand their workforce and are increasing investment in artificial intelligence to boost efficiency and manage risk.
• The NAHB/Westlake Royal Remodeling Market Index (RMI) reading for the fourth quarter of 2025 was 64, up four points from the previous quarter, according to a January 2026 report by the National Association of Home Builders (NAHB). Any RMI reading over 50 indicates that most remodelers feel market conditions are good. In the fourth quarter, the Current Conditions Index portion of the RMI rose three points to 71 compared to Q3 2025. The Future Indicators Index component of the RMI increased by four points to 56. While aging US housing stock, strong homeowner equity, and the aging-in-place trend kept the RMI solidly in positive territory in Q4 2025, the NAHB noted that high building costs and waning consumer confidence continue to pose challenges to the remodeling industry.

• New single-family home sales fell 0.1% month-over-month but were up 18.7% year-over-year in October 2025, according to the US Census Bureau. The October new home sales data was delayed due to the 43-day government shutdown. October's total new home sales reached 737,000 units, following two previous months of gains. Some industry watchers suggest that while mortgage rates gradually inched lower throughout 2025, they are likely to remain elevated, Reuters reports. Mortgage rates closely track the benchmark 10-year Treasury yield, which is under upward pressure from the federal deficit and above-target inflation. There are emerging signals that labor-market concerns are weighing on new-home purchase demand.
• US construction spending on HVAC and plumbing materials is expected to post solid annual growth in 2026, according to FMI's most recent Building Products Market Overview report. In 2026, spending on residential HVAC is forecast to increase by 4.4% over 2025 and nonresidential HVAC spending is projected to grow by 2.7% over the same period. HVAC spending is being driven in part by updates to energy efficiency codes for equipment, which will boost demands for new construction and retrofits. Wider adoption of high-efficiency heat pumps is also a tailwind for the HVAC industry. Spending on nonresidential plumbing materials is projected to increase by 2.7% in 2026; residential plumbing spending is expected to rise by 0.3%. High copper prices are accelerating the pivot to alternative plumbing product materials, including PVC and PEX, which have lower material and labor costs to install.