As of mid-January 2026, the construction and mortgage landscape is shifting from the volatility of the past few years into a “New Normal” characterized by price stabilization in some sectors and a geographical pivot in housing demand.

Construction Materials Cost Digest

Nationally, material costs have stabilized significantly from their pandemic peaks, but certain commodities are defying the cooling trend.

• Lumber & Plywood: Relative stability has returned, with prices hovering around $425–$475 per thousand board feet. However, a polarized trend is emerging: the Northeast and West have seen price retreats of ~15%, while the Midwest and South/Southwest saw increases of 15–28% this quarter.
• Concrete & Cement: This is your primary “margin killer” for 2026. Ready-mix concrete is up 6–8% year-over-year, and Portland cement is up 7–10% due to high energy costs. Analysts warn not to use early 2025 quotes for 2026 jobs.
• Steel & Metals: Steel mill products are up 16% due to new tariffs, and copper is projected to hit $12,500/mt by Q2 2026.
• Insulation: A bright spot for builders—insulation costs have dropped by roughly 22% on average nationwide.
• Construction Mortgages: Rates for construction mortgages have been averaging .75%-1% and downpayments have ranged from 0% -25% down depending on the bank.

Mortgage & Finance News

The “lock-in effect” is finally beginning to thaw as rates move toward the 6% mark.

• Current Rates (as of Jan 15, 2026):

• 30-Year Fixed: 6.06% (down from 7.04% a year ago).
• 15-Year Fixed: 5.38% (down from 6.27% a year ago).

• The “6% Benchmark”: Economists suggest 6% is the new psychological floor. Rates dropping below this threshold are expected to unlock millions of “rate-qualified” buyers who have been on the sidelines.
• Affordability Gains: For the first time since 2020, monthly mortgage payments are expected to decline in real terms this year as income growth outpaces the modest 2–3% home price appreciation.

Regional Market Quadrants

A major geographic realignment is occurring as buyers flee “high-cost hubs” for “refuge markets.”

Custom Home Building Trends

In your Sacramento design-build business, you may see these shifts in client requests:

• The “Costco Closet” Evolution: Large walk-in pantries and “utility zones” (oversized laundry rooms) are now considered non-negotiable for custom builds.
• Character Over Minimalism: Clients are moving away from “Stark White/Modern Farmhouse” toward warmer tones (sage, olive, walnut) and natural materials like stone and exposed beams.
• Invisible Tech: The trend is shifting away from visible wall-mounted screens toward integrated, hidden smart-home systems.

Note for your 2026 Bids: For projects starting in Q2-Q3 2026, it is recommended to include a 4–6% material escalation factor and a 10–15% increase for general liability insurance premiums, which are rising sharply across the industry.

Ready to build? Share your thoughts! What’s your biggest concern about building a custom home in 2026? Comment below or click here to request more information on turning your dream into a reality!

About the author Aaron Meilich NMLS# 769327 is a 30-year construction lending expert and licensed general contractor #1010953 he has a deep understanding and provides construction loans nationwide, (www.FundandBuild.com), the construction process and is well connected with many home building resources throughout the U.S. through his resource site www.Homebrs.com