Bridging the Gap: From Slowdown to Recovery

After several years of constrained housing turnover and cautious consumer spending, the residential window and door market enters 2026 with mixed signals. The industry is no longer dealing with the acute supply shocks of the early 2020s, but demand remains highly sensitive to affordability, financing costs, and the “lock-in” effect that continues to suppress existing-home transactions. The good news: we’re expecting a slow thaw in 2026 and a more meaningful recovery window (pun intended) opening in 2027, with the caveat that it will be uneven across regions and channels. 

New construction versus repair and remodel 

For most manufacturers and dealers, the market is effectively two markets. New construction demand is tied to starts and builder sentiment, while repair-and-remodel is driven by home equity, housing turnover, and household sentiment, which drives homeowners’ willingness to take on discretionary projects. 

For new construction, especially single-family homes, elevated levels of finished, unsold inventory continue to hamper builders’ desire to start new homes. Macroeconomic conditions, coupled with the expectation that prices and rates will fall, are keeping prospective homebuyers on the sidelines. Meanwhile, affordability and homeowner hesitation for big-ticket discretionary purchases are weakening R&R demand. 

Headwinds: affordability, lock-in, and input cost uncertainty 

Affordability is still a governor to demand. Even with mortgage rates improving, home prices and limited resale inventory keep many households sidelined. In late February 2026, average U.S. mortgage rates dipped below 6% for the first time since 2022, but the housing market remains challenged. 

Cost volatility is also returning via trade policy and tariffs. Throughout 2025, manufacturer respondents in our quarterly survey, in partnership with Window + Door Magazine, reported elevated input costs. While the rate of increase slowed slightly between the third and fourth quarter findings—Q3 costs increased by 8% year-over-year, compared to 7% in Q4— these costs do remain elevated. 

Respondents also noted a lack of significant pricing power: weak demand makes it hard for companies to raise prices. 

Tailwinds: rates drifting down and tax rebates 

The clearest tailwind is the direction of financing costs. The Federal Reserve is still planning two rate cuts this year, which should push short-term interest rates down, leading to an expected bump in HELOC loans. We believe that this may be a driver for bigger-ticket R&R projects, including window replacement.  

Another tailwind is an expected outsized tax refund this year. Payroll withholdings were not updated for 2025 following the passage of the Big Beautiful Bill, and many households can expect larger tax refunds. This may also be a tailwind to encourage homeowners to undertake home improvement projects. 

Expect 2026 to be the bridge—and 2027 to feel different 

Many signs point to 2026 as a transition year: improving rates leading to improved consumer sentiment. The administration is focused on policy changes affecting housing, but concrete actions are muted at the moment. Resale volumes should benefit from potential demand stimulus, while lower rates will boost home equity withdrawal. Our Remodeling Index showed that momentum slowed in the second half of 2025. This should stabilize in the first half of this year, with recovery beginning in the second half. Longer-term, remodeling has become an increasingly important end market. Remodeling accounts for nearly half of overall residential spending, near an all-time high. 

On the new construction side, the spring selling season will be crucial to housing starts later this year. While mortgage rates are roughly a percentage point lower than this time last year, macroeconomic uncertainty and policy changes continue to weigh on new home purchases. 

While uncertainty continues in the near-term, we believe the backdrop for a return to volume growth in new construction and R&R next year is favorable.