Residential Construction Trends January 2026
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.”
Region | Market Status | Specific Data Points |
Northeast | High Demand | Leading the nation in price growth (e.g., Hartford, CT & Rochester, NY). New construction is scarce, keeping price premiums on new builds high. |
South | Inventory Growth | Supply is recovering faster here than in the North. Asphalt roofing saw its highest hikes here (+13.3%). Migration to “value hubs” like Richmond, VA remains strong. |
Midwest | Value Leader | Becoming a top destination for out-of-state buyers. Note: Midwest drywall prices jumped 18% this quarter, a regional anomaly. |
West | Balanced | More inventory is available due to aggressive building policies. Lumber prices in the West are currently 8–12% higher than in the Southeast or Midwest. |
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.