From Surviving 2025 to Winning 2026: The Contractor Playbook for the Next Wave of Demand

As 2025 closes, home improvement contractors across the U.S. can agree on one thing: it wasn’t a “normal” year. Leads didn’t vanish, but decision cycles stretched. Material costs remained unpredictable. Hiring stayed painfully hard. And many contractors felt squeezed between homeowners who want the job done and households trying to keep monthly budgets under control.

Here’s the upside: the same forces that made 2025 stressful are also creating the shape of demand for 2026. Homeowners are still investing in their homes often because moving is expensive and psychologically “off the table” when they’re locked into low mortgage rates. Freddie Mac has described this mortgage-rate lock-in effect, noting nearly 6 in 10 borrowers have a mortgage rate at or below 4%, which can reduce household mobility and encourage “forever home” upgrades instead.

So the question isn’t, “Will homeowners spend?” The question is: Which contractors will be easiest to say yes to with clearer proposals, faster follow-up, reliable scheduling, and payment options that match how consumers make decisions now?

This playbook consolidates what contractors battled through 2025 and turns it into an actionable 2026 plan, focused on margin, labor, close rate, and customer experience.

What contractors faced all through 2025 (the reality check)

1) A demand environment shaped by “staying put”

Many homeowners are choosing renovation over relocation. That doesn’t automatically mean they spend freely; it means they’re strategic. They’ll still compare options, delay decisions, and look for ways to make projects feel financially safe.

Mortgage rates remained elevated relative to the ultra-low period years ago, and even in late 2025 the average U.S. 30-year fixed rate was still in the 6% range (Freddie Mac data reported via AP). That keeps transaction volume muted and strengthens the “improve rather than move” dynamic, especially for households sitting on low-rate mortgages.

What this looked like on the ground in 2025:

• More estimate requests, but more “I need to think about it.”
  
  
• More price sensitivity, even among households with solid income.
  
  
• More projects needing a stronger “value story” (and a stronger close process).
  
  

2) Labor stayed brutally tight, and the stats prove it

The labor crunch wasn’t a headline. It was a daily operational constraint.

• In the AGC 2024 Workforce Survey Analysis, contractors reported widespread difficulty filling openings: 94% of firms with craft openings said those positions were hard to fill, and 92% said salaried openings were hard to fill.
  
  
• In a reported AGC/NCCER survey result summarized by ConstructConnect, 92% of U.S. construction firms said they struggle to hire qualified workers.
  
  
• ABC’s workforce model said the U.S. construction industry would need to attract 439,000 net new workers in 2025 to meet demand.
  
  

For many home improvement businesses, this meant sales and marketing weren’t the limiting factor; capacity was. Even strong contractors had to say “not yet,” stretch timelines, or rely on subs at higher cost.

3) Volatility punished “loose” estimating and weak change-order discipline

In a noisy cost environment, sloppy scope becomes a margin leak. The contractors who felt squeezed most weren’t necessarily charging “too little.” They were absorbing value drift: tiny add-ons, unclear assumptions, and customer expectations that shifted after the contract.

In 2025, the businesses that protected margin best tended to do three things consistently:

• Tighter scopes and fewer “gray areas”
  
  
• Allowances where volatility is real
  
  
• Change orders treated as a system, not a vibe
  
  

4) Approval friction quietly killed deals

A lot of contractors still treat financing as an awkward side conversation: “Do you want financing?” If the customer says yes, the contractor sends them down a single-lender path and hopes it works. In a year like 2025, when consumers were cautious, and credit fit varies widely, this often produced a painful pattern:

Approved? Great. Declined? stalled. “Let me think.” Lost.

This is where a more modern approach matters in 2026: make affordability part of the proposal experience, and increase the odds that a customer finds terms that fit.

5) Customers demanded “professionalism signals” more than ever

When households are cautious, they look for certainty. They reward businesses that reduce ambiguity:

• fast follow-up
  
  
• clear timelines
  
  
• transparent warranty language
  
  
• social proof
  
  
• professional proposal presentation
  
  

In 2025, “being good at the work” was not always enough. Contractors needed to be good at the process.

What to prepare for in 2026 (and why it matters)

Remodeling activity looks steady, but growth may be slower

Harvard’s Joint Center for Housing Studies (JCHS) publishes the Leading Indicator of Remodeling Activity (LIRA), which projects near-term renovation spending. One 2025 LIRA summary reported remodeling and repair spending expected to grow only about 1.2% through Q2 2026 (to roughly the $516B range), suggesting a softer growth environment where competition stays intense and operational excellence matters even more.

Translation for contractors: you can still win in 2026, but close rate, referral rate, and margin discipline will matter more than “more leads.”

Labor pressure isn’t disappearing

ABC’s workforce outlook didn’t just point to 2025, it also projected the industry would need even more workers in 2026 (often quoted around 499,000 in summaries). And labor competition is being intensified by high-paying megaproject categories (like data centers), which major outlets have covered as a “gold rush” pulling skilled trades with higher pay.

Translation: if you don’t build a retention + productivity plan, 2026 will build your plan for you, through delays and overtime.

Homeowners want upgrades but they want budget certainty

Even when homeowners “want the job,” they often want a decision that feels safe. For many customers, that means thinking in monthly payments, not total ticket price, especially when rates and overall household costs remain psychologically high.

This leads to a simple 2026 truth:
Contractors who make “yes” easy will win the next wave of demand.

The 2026 Contractor Playbook (how to win on margin, labor, and close rate)

1) Turn your estimating into a margin-protection system

If your 2025 takeaways include “we did a lot of work we didn’t get paid for,” start here.

Your 2026 goal: fewer surprises, fewer freebies, fewer disputes - more predictable gross margin.

Adopt three core upgrades:

1. Scope clarity by default: build templates by job type (roofing, windows, bath, HVAC, etc.), with clear inclusions/exclusions.
   
   
2. Allowances where volatility is real: document what’s included, how upgrades are priced, and what triggers a change order.
   
   
3. Change orders as policy: no “just this once.” If it changes cost/time/scope, it’s a signed change order, every time.
   
   

This doesn’t make you rigid. It makes you scalable.

2) Build a sales process designed for decision delay (without being pushy)

In 2025, “I’ll get back to you” became a graveyard phrase.

In 2026, your sales process needs to anticipate hesitation. That doesn’t mean pressure; it means structure.

A high-performing, reader-friendly approach:

• Present Good / Better / Best (not one option)
  
  
• Set a brief decision meeting (“Let’s finalize in 15 minutes tomorrow”)
  
  
• Follow up faster than your competitors (the easiest signal of professionalism)
  
  

One important shift: stop presenting your bid as an “estimate.” Present it as a plan: scope, timeline, warranty, and payment options.

3) Make affordability part of the proposal

Homeowners don’t just buy a roof, kitchen, or HVAC unit. They buy the confidence that they can afford it and that the job will go right. In 2026, you win by reducing financial uncertainty.

Instead of asking, “Do you want financing?” consider positioning it as:

• “Here are your options, and here’s what monthly payments typically look like for each.”
  
  

And instead of relying on a single lender (one shot), consider a multi-lender approach that increases the odds of fit.

At FinMkt, that concept is the multi-lender waterfall: one application routes customers through multiple lender options so more homeowners can land on an approval and terms that match their profile without you manually shopping deals or acting like a loan officer.

This does two things contractors care about:

1. Protects close rate (fewer “declined = lost” outcomes)
   
   
2. Protects ticket size (customers choose the project option they actually want when monthly payments are clear)
   
   

4) Treat labor like a capacity plan, not a hiring wish

If you’re running a contractor business in the U.S., labor is not a “department problem.” It’s a leadership lever.

AGC’s survey analysis illustrates the widespread hiring challenge; most firms are attempting to hire but struggling to fill roles. That means the winners in 2026 will be the ones who improve throughput, not just headcount.

One simple but powerful approach is a weekly capacity meeting:

• crew-days available in the next 4 weeks
  
  
• jobs sold (by install week)
  
  
• risk flags (permits, materials, subs)
  
  
• decisions needed (overtime, subcontract, reschedule)
  

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This prevents the two most expensive outcomes:

• overselling and delaying installs (refunds, reputation hits)
  
  
• underselling and leaving revenue on the table
  
  

5) Tighten customer experience to increase referral flywheel

In softer growth environments, referrals become a force multiplier. Your marketing becomes cheaper when operations are consistent.

Your 2026 CX standard should include:

• A clear “what happens next” after contract signing
  
  
• Proactive communication on scheduling
  
  
• Photo updates or milestone check-ins where appropriate
  
  
• A simple close-out packet: final walkthrough, warranty info, review request
  
  

Customers won’t always remember every detail of the build. They’ll remember whether it felt organized.

The End-of-Year Reset: a 2026 readiness checklist (use this internally)

• Proposal templates standardized by job type
  
  
• Change order rules written and enforced
  
  
• Good/Better/Best option packaging implemented
  
  
• Follow-up cadence measured (speed-to-contact + speed-to-quote)
  
  
• Weekly capacity plan in place (sold vs available)
  
  
• Labor strategy includes retention + productivity (not just recruiting)
  
  
• Payment options presented inside the proposal (not as an afterthought)
  
  
• Financing process supports more approvals via multi-lender optionality
  
  

Final thought: 2026 belongs to the “low-friction” contractor

2025 rewarded grit. 2026 will reward systems.

Homeowners will continue to invest in their properties often because moving is challenging when mortgage rates are higher and many households are locked into low-rate loans. But that demand will flow to the contractors who remove friction: clearer scopes, tighter margin controls, reliable scheduling, and a checkout experience that makes affordability straightforward.

If your strategy for 2026 can be summarized in one sentence, make it this:

Make it easier to say yes.

If you’re tightening your 2026 playbook around close rate, capacity, and margins, make financing part of the “checkout” experience, not a last-minute add-on. A multi-lender waterfall can help more homeowners find an approval and terms that fit, using a single application and a streamlined flow your team can offer right from the proposal.

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Want to see what this looks like in practice? Request a free demo of FinMkt’s multi-lender waterfall model, and we’ll walk you through how contractors are using it to reduce drop-off, speed up decisions, and win more projects in 2026.

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