According to the report, overall economic growth is expected to slow but remain positive as inflation eases and interest rates gradually decline. Employment growth is projected to cool as the unemployment rate approaches 5%, though labor demand among P-H-C businesses is expected to remain strong due to retirements and a limited pipeline of new workers.
PHCC noted that labor shortages continue across construction trades, including HVAC, and plumbing, with roughly half of employers reporting difficulty finding skilled applicants. Data from the National Association of Home Builders shows these trades rely heavily on foreign-born workers, which could add strain as immigration enforcement policies evolve.
The report projects uneven construction growth in 2026, with strength concentrated in data centers, infrastructure programs, and renovation activity rather than broad-based new construction. Residential remodeling is expected to grow about 2% as homeowners prioritize energy-efficiency upgrades and system replacements. Single-family residential construction is projected to grow approximately 1%, while multifamily construction is expected to decline by about 2%.
Nonresidential construction is forecast to remain mixed, with continued investment in data centers, transportation, and health care, while lodging and other commercial segments are expected to soften. Water supply and sewage as well as waste disposal construction are projected to grow 4% and 6%, respectively, driven by infrastructure investment and regulatory requirements.
PHCC also highlighted continued interest in artificial intelligence across home services. A 2025 Housecall Pro survey found more than 70% of home-service professionals have experimented with AI, with common applications including administrative support, marketing, review management, scheduling, and operational visibility.
On refrigerants, the report noted that low-global-warming-potential A2L equipment accounted for 90% of distributor sales by October 2025, indicating the industry’s transition is largely complete. PHCC also cited the Environmental Protection Agency’s decision to deprioritize enforcement of certain installation bans, allowing continued installation of some R-410A equipment in 2026.
Consolidation is expected to continue in 2026 as private equity and strategic buyers pursue HVAC and plumbing firms with multi-trade capabilities, recurring service revenue, and geographic scale.
PHCC concluded that contractors entering 2026 will face a complex environment shaped by labor constraints, cost pressures, and uneven demand. The association said businesses that closely manage risk, invest in workforce development, and leverage technology will be better positioned to navigate the year ahead.
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