Building Product Suppliers Enter 2026 Under Price/Cost Pressure
Thursday, January 29, 2026 by McClaran Hayes
Building products manufacturers are walking a tightrope into 2026, as input costs are still elevated (and in some cases re-accelerating), but the ability to push through pricing remains constrained by a soft residential volume backdrop and increasingly aggressive customer demands.
On the cost side, tariffs remain a persistent pressure, particularly for businesses with imported content or metal exposure. Even outside of tariffs, underlying inflation hasn’t disappeared: multiple respondents in our latest Building Products survey cited rising input costs across the raw material basket, and some administrative expenses – such as healthcare – are also areas of concern entering the year.
However, price increases are lagging inflationary cost pressures. Across the channel, suppliers are reporting that price realization often is not enough to offset cost pressures, especially with large, price-sensitive customers. Several industry executives have explicitly noted that price hikes were “not enough to cover tariff costs” and one noted that big-box retail generally isn’t paying higher prices to cover suppliers’ tariff costs.
That dynamic is also showing up in the builder end channel: our monthly Homebuilding Survey shows labor and material costs only rose 0.9% year over year in December, dipping below 1% for the first time since 2010, and costs were up less than 2% on an annual basis in 2025. Said differently, builders are successfully pushing back on the cost increases in their business that would be price improvements for suppliers.
With end-demand soft, large customers are squeezing their suppliers in for price concessions. Our building products contacts have described more widespread requests to discount as necessary to win large projects, and “brutally competitive” price environments that force reactive pricing.
In response, building products manufacturer margins have declined on a year-over-year basis for the past seven months, and most respondents expect continued pressure in the near-term, given unfavorable price/cost trends. Overall, while it is fair to say that the impact of tariffs has been more muted than many initially feared, these costs are adding an additional headwind to fundamentals within certain aspects of the housing ecosystem.
On the cost side, tariffs remain a persistent pressure, particularly for businesses with imported content or metal exposure. Even outside of tariffs, underlying inflation hasn’t disappeared: multiple respondents in our latest Building Products survey cited rising input costs across the raw material basket, and some administrative expenses – such as healthcare – are also areas of concern entering the year.
However, price increases are lagging inflationary cost pressures. Across the channel, suppliers are reporting that price realization often is not enough to offset cost pressures, especially with large, price-sensitive customers. Several industry executives have explicitly noted that price hikes were “not enough to cover tariff costs” and one noted that big-box retail generally isn’t paying higher prices to cover suppliers’ tariff costs.
That dynamic is also showing up in the builder end channel: our monthly Homebuilding Survey shows labor and material costs only rose 0.9% year over year in December, dipping below 1% for the first time since 2010, and costs were up less than 2% on an annual basis in 2025. Said differently, builders are successfully pushing back on the cost increases in their business that would be price improvements for suppliers.
With end-demand soft, large customers are squeezing their suppliers in for price concessions. Our building products contacts have described more widespread requests to discount as necessary to win large projects, and “brutally competitive” price environments that force reactive pricing.
In response, building products manufacturer margins have declined on a year-over-year basis for the past seven months, and most respondents expect continued pressure in the near-term, given unfavorable price/cost trends. Overall, while it is fair to say that the impact of tariffs has been more muted than many initially feared, these costs are adding an additional headwind to fundamentals within certain aspects of the housing ecosystem.
Thursday, January 29, 2026 by McClaran Hayes
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