2025 has delivered a rare convergence of pressures—economic uncertainty, climate volatility, escalating insurance risk, grid instability, and shifting consumer expectations—while at the same time revealing remarkable momentum in the areas that matter most: efficiency, resilience, healthy homes, and innovations that reduce the total cost of ownership.
Across the industry, one truth has become inescapable: the foundations of the housing market are shifting, and the companies that will thrive in 2026 and beyond are those that adapt to this new structural reality rather than attempting to navigate with frameworks that no longer apply.
I’ll unpack these themes during our annual State of the Industry webinar on December 10 at 2:00 ET, supporting them with information about economic forecasts, policy changes altering housing fundamentals, building performance trends, consumer demand, and the most current COGNITION Smart Data insights.
In 2025, mortgage rates remained vexatiously high; materials and labor costs remained unpredictable; financing and insurance requirements tightened; and the One Big Beautiful Bill (OBBB) removed incentives that had catalyzed market transformation over the past several years.
Yet instead of slowing sustainable housing advancement, these pressures accelerated the industry’s trajectory toward higher performance and lower operating costs. COGNITION Smart Data indicates that buyers across every generation now prioritize full cost of ownership over first cost and are increasingly unwilling to purchase homes that saddle them with elevated energy bills, inadequate resilience, and insurance challenges.
Builders and developers are responding in kind. In a recent COGNITION survey, more than two-thirds reported that resilience and energy savings are now central to the value proposition they present to buyers, not add-ons. Healthy homes and high indoor air quality remain top priorities, another trend that began well before COVID and has only strengthened since.
What we are witnessing is not a momentary shift in preference, but the maturation of a new marketplace—one in which affordability, resilience, efficiency, and wellness exist on a single continuum, shaping demand and defining competitive differentiation.
The growing volatility of climate-related disasters has forced a reckoning across insurance markets, building codes, and project financing. Homes that lack resilience are becoming more expensive to insure, more difficult to finance, and harder to sell. In some markets, they are becoming uninsurable entirely.
Simultaneously, the grid is showing signs of acute stress. Data centers, electrification, and population growth are pushing electricity demand to levels we haven’t seen in generations. Utilities are struggling to keep up, and outages, from short disruptions to prolonged blackouts, are becoming more common. For homeowners, that fragility translates into rising anxiety and escalating monthly bills.
The new affordability crisis is not simply about mortgage rates. It’s about whether a home is stable, predictable, and secure to operate. Solar + storage, smart load management, and distributed energy resources have shifted from “green upgrades” to economic differentiators. Homes that provide lower and more predictable operating costs are, increasingly, the ones buyers can confidently afford.
And yet, in the midst of all this transformation, the industry still relies on an outdated price per square foot valuation metric that ignores everything buyers say they value most.
It does not account for energy performance, durability, insurance risk, electrification readiness, carbon footprint, emissions reduction, or occupant health. It treats code-minimum construction as equal to a high-performance envelope. It flattens innovation and obscures value.
Simply put, it incentivizes builders to produce the wrong product.
It’s time to replace price per square foot with a more accurate and equitable metric: value per square foot.
This shift is not theoretical. It is a fundamental evolution in how we assess housing, one that encourages better-performing buildings, aligns real cost with perceived cost, and rewards the companies willing to innovate. It brings our valuation system closer to what buyers already understand intuitively: a home that performs better is worth more.
Forecasts for 2026 suggest slow but steady growth in the housing sector. Mortgage rates are expected to drift downward; inventory pressures will gradually ease as the lock-in effect loosens; and younger buyers—especially Millennials and Gen Z—will return to the market with renewed resolve.
But, to set expectations, we will not revert to pre-2020 housing norms. The next growth cycle will be shaped by different expectations, different risk models, and different definitions of value.
Hot-off-the-press COGNITION Smart Data that I’ll present during the State of the Industry webinar corroborates that:
• Buyers increasingly expect energy independence and resilience as standard.
• Healthy indoor air quality is now considered a baseline assumption, not a luxury.
• Climate risk is directly influencing buyer geography and builder strategy.
• Consumers want homes that are not only sustainable, but future-proofed—economically, physically, and environmentally.
Building professionals and manufacturers entering 2026 with outdated product offerings will struggle, while those who embrace performance, precision, and smart energy will thrive.
The 2025 State of the Industry webinar will offer a comprehensive examination of the economic, regulatory, environmental, and consumer forces reshaping housing. More importantly, it will provide guidance on how building professionals and manufacturers alike can navigate the volatility ahead with clarity and seize the opportunities embedded in this moment of transformation.
We’ll explore:
If you want to understand where the industry is headed—and how to lead in this new era—this is the briefing to attend.
Register now for the December 10 State of the Industry webinar