As we kick off 2026, the housing sector shows cautious optimism. Mortgage rates are projected to average around 6%, with some forecasts dipping to 5.75% or even 5.5% if inflation cools and Fed policies align. This decline from 2025’s highs could unlock affordability, expanding the buyer pool by millions and boosting home sales by 3-14%. Housing starts are expected to stabilize or modestly rise, with single-family construction up 1-4% to about 1 million units annually.

For all of us, it’s too bad that new construction doesn’t mirror the Low Country in South Carolina, the coastal area from Charleston to Savannah. While visiting last weekend, I saw development after development with hundreds of homes under construction. But even there, builders can handle an improving demand. Overall, the builders I met were optimistic and highlighted signals pointing towards deregulation as part of their optimism. All remain concerned about tariffs but generally note that the impact has been less than expected.

Lower rates should spur demand, counter weak 2025 trends, and ease inventory shortages. Fed Chair Jerome Powell’s term ends May 15, wrapping a tenure focused on post-pandemic recovery. He may step down fully, though his governor role lasts until 2028. President Trump is poised to name a successor soon, finalists include Kevin Hassett, Kevin Warsh, Christopher Waller, and Rick Rieder. A hawkish pick like Warsh could keep rates steady, while Hassett might push for looser policy, risking inflation but aiding growth.

For durable goods made from Alder hardwood, key for millwork and cabinetry, a housing rebound means stronger consumer spending. With wages outpacing 1-2% home price growth, expect renewed demand for home improvements.
Challenges like material tariffs persist, but overall, 2026 signals a recovery for builders and suppliers alike. At Cascade we are seeing some improvement in markets, and alongside the challenging log environment as mentioned in earlier articles, we expect buyers will have to look further ahead on placing orders to get all the Alder they need.