{"id":3901,"date":"2026-07-20T23:21:29","date_gmt":"2026-07-20T23:21:29","guid":{"rendered":"https:\/\/lightingnewsnow.com\/?p=3901"},"modified":"2026-07-21T12:06:24","modified_gmt":"2026-07-21T12:06:24","slug":"what-builders-and-contractors-are-saying","status":"publish","type":"post","link":"https:\/\/lightingnewsnow.com\/?p=3901","title":{"rendered":"What Builders & Contractors Are Saying"},"content":{"rendered":"\n

In a recent housing industry forum, participants detailed factors other than interest rates that are slowing down construction activity.<\/strong><\/p>\n\n\n\n

I was invited to sit in on a homebuilders industry forum this month to hear about current conditions builders, contractors, property developers, and building materials suppliers are experiencing nationwide. Due to confidentiality agreements, I cannot divulge the participants\u2019 names, their businesses, or their precise locations \u2014 however, I am<\/em> allowed to share the overall nature of what was discussed.<\/p>\n\n\n\n

As lighting retailers have told me anecdotally at trade events this year, the higher end of the market has been slowing down. This was confirmed by builders attending the forum who have recently completed million-dollar single-family homes and townhomes in the West, South, Northeast, and MidAtlantic regions. The consensus is that the market has been changing over the past 18 months.<\/p>\n\n\n\n

Typically luxury homebuyers are less sensitive to affordability concerns. Some builders noted they had a strong 2024 and 2025 in the high-end, but that momentum has dwindled in 2026.\u00a0One builder stated that they currently have a dozen luxury homes in the $7+ million range that have not sold in nine months.<\/p>\n\n\n\n

A Mountain states builder noted that sales for $700,000 and $800,000 homes have dropped when it comes to the \u201cmove up\u201d category. Once considered the prime buyer for homes at that price point, existing homeowners who want to level up are pausing their plans because they don\u2019t want to lose their current 3% to 4% interest rates. As a result, today\u2019s customers for new homes in that price range are wealthy households who are remaining in their primary residence (and keeping that low interest rate) and buying these as second homes. Unfortunately, there are less of those situations happening.<\/p>\n\n\n\n

The townhome market is also not immune from these market conditions. Luxury townhomes in the 2,300-sq.-ft. and 3,600-sq.-ft. range are selling for over $1 million in some metros \u2014 but those properties are taking longer to sell.<\/p>\n\n\n\n

A Mid-Atlantic builder who works primarily in the secondary home market has also seen business decrease. \u201cIf people are not comfortable with their [investment] portfolios, we see a drop off \u2014 that\u2019s how they pay for [these second homes] a lot of the time,\u201d he said.<\/p>\n\n\n\n

One forum participant noted, \u201cWe try to get feedback from our clients and partners, and [they] are saying that consumer confidence is a massive driver here. People are holding back money and only doing maintenance. More and more of the larger projects that we had bid on \u2013 and were hopeful for \u2013 have either been postponed or canceled, and we\u2019re continuing to see that.\u201d<\/p>\n\n\n\n

Other factors at play<\/strong><\/p>\n\n\n\n

Higher interest rates are often blamed as the reason for sluggish home sales \u2013 and that\u2019s not incorrect \u2013  but it\u2019s just part of the equation. There are other costs making homes more expensive.<\/p>\n\n\n\n

Observed one participant, \u201cLabor costs haven\u2019t gone up [significantly] over the past three years and material prices have been pretty consistent since post-COVID, but it\u2019s the fee increases by municipalities that are out of control.\u201d<\/p>\n\n\n\n

Others in the forum agreed, adding they are paying thousands more for park and school and building fees as well as water and sewer fees. One developer said, \u201cWe used to be able to build a duplex for about $15,000 per door, and I just paid $130,000 per door for a duplex.\u201d [Editor\u2019s note: \u201cPrice per door\u201d is a metric used in multifamily housing where the average cost of each unit is calculated by dividing the total purchase price by the number of units.]\n\n\n\n

With the passing of the 21st<\/sup> Century Road to Housing Act<\/a>, \u201caffordable housing\u201d has been put front and center on state and municipal levels. Builders and developers have observed that those municipal fees are either waived or reduced if their projects qualify for an \u201caffordable housing\u201d initiative.  <\/p>\n\n\n\n

A forum participant in a major metro in the West noted that there are more general contractors in his area who are only<\/em> doing \u201caffordable housing\u201d as a result. \u201cWhen you\u2019re not getting those fees waived, it is not possible to get starter homes and townhomes that should be on the market for $400K. That\u2019s just not possible with more than $100,000 per door in fees. So now our starter home price is in the $500Ks.\u201d<\/p>\n\n\n\n

A builder in the Northeast said the multifamily sector has been performing well, however, single-family homes have slowed. \u201cWe\u2019ve had a lot of people back out,\u201d he said. \u201cThey\u2019re not sure of the climate regarding what\u2019s going on in the country, fuel prices, interest rates, and things like that. Everyone I\u2019ve spoken with is down a little bit, but the main issue is [customers\u2019] uncertainty in going forward with a project. Fortunately, we\u2019re holding our own. Our highs and lows are not anywhere near where everybody else is at.\u201d<\/p>\n\n\n\n

Customers\u2019 desire for greater energy efficiency in order to curb rising energy costs is another component adding to the cost of a home.<\/p>\n\n\n\n

California, New York, Colorado, Oregon, Massachusetts and Washington are among the states pushing for a greater reliance on electricity in new homes versus fossil fuels like natural gas. In addition, more municipalities in the country\u2019s major metros are instituting their own energy-efficiency policies.<\/p>\n\n\n\n

\u201cThere\u2019s a wave of energy-efficiency improvements that are coming through metro municipalities right now,\u201d one builder said. What [some municipalities] are going to enact is going to make it almost impossible to build a building without doing 100% foam insulation and achieve our building requirements. We also have a big push toward all-electric homes, which is increasing costs.\u201d<\/p>\n\n\n\n

A contractor added, \u201cEveryone is talking about affordability, but everything you are putting in to make [the home] more energy-efficient is driving the cost up. That\u2019s a definite concern for us that it costs us more to make homes more efficient.\u201d<\/p>\n\n\n\n

One forum participant noted that a recent change \u2013 in this case, putting UV tint on all of one home\u2019s windows \u2013 cost an extra $200,000 because of the UV requirements in that municipality. Such regulation \u2013 even in the name of greater energy efficiency \u2013 is not helping with housing affordability, these pros said.<\/p>\n\n\n\n

When there aren\u2019t a lot of obvious places to save on cost, some companies are focusing on finding productivity efficiencies by implementing software programs that measure all sorts of data, including the cost of trips to building sites from your suppliers and trades. As one professional noted, \u201cThe cost of their trips ends up getting reflected in the cost to you.\u201d <\/p>\n\n\n\n

Another hidden driver is the recent price spike for materials that involve oil in some way. Due to the conflict in the Middle East, a supplier told the forum that the price for asphalt roof shingles has tripled over the past few months. Warned one supplier, \u201cPlastic, naphtha, polyethylenes and all those types of things are going up because those chemical costs have risen and they just haven\u2019t been passed on yet.\u201d For example, since kitchen and bath cabinets contain petro-chemicals, builders will see those costs rise as well.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

<\/p>\n\n\n\n

The outlook for the rest of 2026<\/strong><\/p>\n\n\n\n

All of the participants in the forum didn\u2019t start the year with high expectations \u2014 and in that regard, they weren\u2019t disappointed.  <\/p>\n\n\n\n

Stated one property developer, \u201cThis is what we were expecting, and that\u2019s been driven by the most inventory we\u2019ve had in apartments, starter homes, all the way up to the million-dollar market. This is the most inventory we\u2019ve had by far since 2008. So, we did<\/em> expect this to be a slow year, and it\u2019s proving to be true.\u201d<\/p>\n\n\n\n

Added one builder, \u201cWe saw some of our larger projects having delays, whether it was getting financing in place or other plays. As a result, we don\u2019t have as strong second half of the year as we thought we would. So, we\u2019re trying to fill in the gaps.\u201d <\/p>\n\n\n\n

A materials supplier in the Mid-Atlantic said, \u201c2025 was pretty strong for us, especially early in the year. And then 2026 is almost the opposite. However, 2027 looks like might be a pretty good year for us at this point.\u201d<\/p>\n\n\n\n

A buildings software supplier stated, \u201cI think we\u2019ll be flat this year. We are officially half a percent above last year, which I guess is a good thing. Our forecast for the balance of the year is a slight uptick. At best, we\u2019re looking at a modest increase in sales through 2027, but that\u2019s mainly because of the relationships we\u2019ve been making and expanding where we\u2019re chasing.\u201d<\/p>\n\n\n\n

A builder in one of the Mountain states commented, \u201cWe have some indications that buying will pick back up this time next year \u2014 but it won\u2019t be fast. I don\u2019t think anyone believes that it\u2019ll be a bounce back, but hopefully it will be an upward trend that is consistent.\u201d   <\/p>\n\n\n\n

A property developer said, \u201cIt look like the last couple months are trending in the right direction and that 2027 could be a little bit stronger, but we do not anticipate strong sales.\u201d<\/p>\n\n\n\n

The bottom line<\/strong><\/p>\n\n\n\n

All agree that margins have been squeezed. A builder of homes in the Southeast through the Mid-Atlantic remarked, \u201cWe\u2019re looking at 21% margins versus what we had two and three years ago of 30% margins on the same exact homes. But it keeps us in business, it keeps us moving, it keeps us going. We\u2019re all experiencing compressed margins and compressed profits, but we\u2019re still in business.\u201d<\/p>\n\n\n\n

Many participants in the forum feel that incentives and buydowns won\u2019t be as prevalent going forward. \u201cWe have seen great successes over the past 30 to 45 days in all of our markets just through price. We have to meet the price that people can afford.\u201d<\/p>\n\n\n\n

Other builders noted that the market might be oversaturated in the $400K price range.<\/p>\n\n\n\n

\u201cIf you go over that price, all of a sudden there is not that much demand,\u201d one said, adding, \u201cThe largest influx of people moving in the past couple years [in certain emerging markets we\u2019re in] are in the mid to high $200K-$250K range for ranch homes. You can still find plenty of traction. If you are still pretending that everybody wants to build mansions at $475K, you are probably going to lose.\u201d<\/p>\n\n\n\n

He added, \u201cWhether you want to give it away in incentives or whether you want to hold out, that\u2019s your choice. But the reality is we need to build more efficient, more price-sensitive homes that the people who are out there who want to buy them can buy. There is a disconnect still between builders and buyers.\u201d<\/p>\n\n\n\n

It also was noted in the forum that new homes are a smaller footprint than in the recent past. \u201cWe need to build less-expensive homes that are probably going to be a little bit smaller with a little less features than what buyers thought they could get in 2010 or 2020 or 2022. That\u2019s just the market; that\u2019s the way it goes. But if we\u2019re smart enough to see that and pivot to say, \u2018You know what, 1,800 square feet is the right square footage to build rather than 2,200 square feet,\u2019 it makes sense, right? Everybody wants a 2,200-sq.-ft. house, but they can only afford a 1,800-sq.-ft. one. How can we make that 1,800-sq.-ft. home the best it can possibly be? There are buyers out there and we\u2019ve had great success [with that strategy]. Price right, and you\u2019ll be okay.\u201d<\/p>\n\n\n\n

Related articles<\/strong><\/p>\n\n\n\n

Good News for Showrooms: Builder Confidence Rises in October<\/a><\/p>\n\n\n\n

HomeSphere Platform Partners With Kichler to Offer Incentives to Builders<\/a><\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

In a recent housing industry forum, participants detailed factors other than interest rates that are slowing down construction activity. I was invited to sit in on a homebuilders industry forum this month to hear about current conditions builders, contractors, property developers, and building materials suppliers are experiencing nationwide. 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