The operative theme of the entire hour-long NAHB 2026 economic outlook session was “cautious optimism.” Many of the key housing indicators shared during the session pointed to things trending in the right direction, but all three participants in the discussion agreed that there are still many challenges facing the market—the same market that still hasn’t fully returned to form post-pandemic.
Myriad numbers and charts were shared that showed stagnant mortgage and interest rates, a housing market that’s tipping in favor of the buyer and expected growth in the single-family and townhome starts. Meanwhile, an existing housing inventory shortage, the potential for rising materials cost, labor shortages, and an ongoing affordability problem continue to be pesky headwinds for the market.
Where the real potential lies is in the remodeling and custom build segments.
In Q3 of 2025, the home improvement spending share for the residential construction market was 45 percent, up from 33 percent in 2007. That area is expected to grow another 3 percent this year, according to NAHB.
“The surge in home equity has allowed more homeowners to finance remodeling projects that meet their needs, which include growth for aging-in-place remodeling projects,” Robert Dietz, chief economist for NAHB, said during the session. “NAHB expects robust long-term remodeling growth, and projects overall remodeling expenditures will be 19 percent higher in 2030 and 32 percent higher by 2035.”
On the custom home front, the segment has seen annual average growth over the past three years and currently holds about 20 percent market share.
Dietz was joined in the session by Zonda Chief Economist Ali Wolf and Realtor.com Chief Economist Danielle Hale, both of whom shared similar sentiments around the overall outlook for the market.
In her portion of the presentation, Hale homed in on the mortgage rate lock-in effect, pointing out that while it’s easing, it’s still weighing heavily on the market. “We have reached a mortgage rate lock-in milestone where the share of mortgages greater than 6 percent exceeds the share below 3 percent,” she said. “But the lock-in remains a market headwind, as roughly 80 percent of mortgages have a rate of 6 percent or lower.”
Wolf, during her segment, gave a detailed look at the demographics of the market and what characteristics drive both the opportunities and challenges among them. She summarized her message up with a simple statement on the state of consumer confidence: it’s driven by stability.
“Stability from policymakers,” she said. “Stability in the labor market so that people are confident that their job is safe and/or they can find a new one easy enough. Stability that interest rates will stay steady and won’t move lower, which would keep buyers on the sidelines. And stability in home prices so that a home will be a steadily appreciating asset. These are the market conditions that will move hesitant buyers off the sidelines.”
