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New projects are sector specific, with many industrial warehousing - including cold-chain applications - data center, power generation, health care, and high-value manufacturing markets seeing both sustained activity and new project interest, he says. According to the American Supply Association's Monthly Economic Report, forecasting shows GDP growth moderating, oil and freight costs stabilizing, and key construction indicators posting mixed signals heading into mid-2026. Rising material costs and tariffs may suppress discretionary spending in some segments, but "residential sales opportunities are expected to improve as housing markets stabilize," the Plumbing-Heating-Cooling Contractors-National Association (PHCC) President Jason Pritchard notes. According to ASA benchmarking data, the channel continues to adopt more digital tools for quoting, inventory visibility, and jobsite delivery management - not as a competitive advantage, but as an operational necessity.
With supply chain volatility easing but labor and regulatory pressures mounting, distributors lean on data, partnerships, and smarter inventory strategy.
By most economic indicators, 2026 is shaping up to be a year of cautious stability rather than broad-based expansion for the PHCPPVF distribution channel - a market defined by uneven momentum across end-use segments, fragile sentiment, and a watchful eye on economic catalysts that could unlock growth in the second half of the year.
Forecasts for 2026 show conditions remaining stable, but flat, through Q2 of 2026 for many markets," says Keith Prather, MBA, managing partner and co-founder of Armada Corporate Intelligence, the American Supply Association's long-time business intelligence partner. "Residential headwinds continue. Higher home prices, construction and borrowing costs are keeping many buyers on the sidelines.
Prather notes that while new housing activity remains constrained, selective opportunity persists elsewhere. Certain nonresidential commercial and industrial construction sectors are still showing resilience, and foot traffic for general contractors is inching up marginally with clients asking for project cost updates, any regulatory change or benefits, and other factors that could potentially change a project he says. Many are also requesting estimated timing for beginning a project
According to Prather, early engagement is translating into sustained activity in several high-value sectors. New projects are sector specific, with many industrial warehousing - including cold-chain applications - data center, power generation, health care, and high-value manufacturing markets seeing both sustained activity and new project interest, he says.
Despite these pockets of strength, broader confidence remains restrained. Most economic sentiment measures are weak in both corporate and consumer markets, and many firms are keeping projects on hold, waiting for key catalysts to develop Prather explains. Consumers and executives alike are still concerned that tariff-induced inflation is still in the offing, and layoffs currently being blamed on Al adoption rates - when it could be a corporate rightsizing' trend - is creating the Wall of Worry for most
Looking ahead, Prather says the direction of the plumbing economy in 2026 will hinge largely on capital costs and trade stability. The Federal Reserve trimming interest rates, a reduction in the yield on U.S. Treasuries - which pulls down borrowing costs for long-duration loans - and some stability in the trade environment are likely the key catalysts to watch for in 20267 he says.
Many forecasts now speculate that economic and project momentum will build in Q2 of next year and continue through the end of 2026 in both residential and nonresidential markets. However, Prather cautions that risks remain. The greatest areas of caution - the factors that could derail this Q2 acceleration period - would come from significant changes in hiring activity and any pressure that might build in the credit markets, which would cut off funding for projects, he says. At this time, those risks are muted, but they still warrant monitoring.
According to the American Supply Association's Monthly Economic Report, forecasting shows GDP growth moderating, oil and freight costs stabilizing, and key construction indicators posting mixed signals heading into mid-2026. Economists contributing to ASAs reports note that "economic risk remains elevated, but channel fundamentals are stronger than national headlines suggest," pointing to continued resilience in wholesale sales trends and contractor backlogs.
That balanced sentiment is reflected across the industry. Luxury Products Group Executive Director Jeff MacDowell says Luxury Products Group remains optimistic about 2026... while broader construction growth is expected to normalize, we see sustained demand in the remodeling and luxury segments. His perspective underscores a defining theme for distribution: not everything is expanding, but many profitable pockets are holding steady or accelerating.
On the manufacturing side, Plumbing Manufacturers International CEO Kerry Stackpole offers a complementary view. "Taking the broad view shows a favorable growth environment for plumbing fixtures and fittings. Stackpole says, pointing to steady monetary policy, resilient consumer finances, and bank lending conditions that remain far more favorable than many anticipated.
Within this environment, distributors are navigating a landscape shaped by tightening regulations, evolving technology, rising labor pressures, channel consolidation, and unpredictable global supply dynamics. The year ahead will require sharper forecasting, closer manufacturer relationships, and more sophisticated use of data and digital tools across the supply chain.
The tale of two markets - and a shifting mix
Wholesalers enter 2026 watching two parallel markets move at different speeds.
On the residential side, NAHB forecasts show single-family starts ticking up slightly in 2026 after a contraction in 2025, supported by modest interest-rate relief and a long-term shortage in housing inventory. But NAHB continues warning of "persistent affordability challenges. meaning distributors tied heavily to new-home plumbing rough-in may continue to feel pressure.
However, the remodeling market tells a different story. NAHB notes that remodeling's share of residential construction is now structurally higher, not just a pandemic-era anomaly. This trend directly benefits showrooms, luxury bath and kitchen categories, and water quality products - segments where LPG members continue to outperform.
That aligns with MacDowell's outlook: "Affluent homeowners remain resilient and committed to creating experiential, high-performance spaces." For distributors, that means the higher-end consumer remains a strong customer in a year when broader residential softness persists. Commercial and institutional plumbing, meanwhile, continues to offer stability and opportunity. Dodge Construction Network reports mid-single-digit growth in total construction starts on a 12-month basis, driven largely by data centers, healthcare, education, and warehouse construction. Their Momentum Index reinforces strong planning activity in these sectors for late 2025 into 2026.
Stackpole highlights these same pockets of strength: "We see accelerated growth in retail, office, data centers, warehouse, education, and healthcare." For PVF distributors, these markets will anchor growth in 2026, particularly as manufacturing and municipal starts remain softer.
ConstructConnect's latest five-year outlook echoes this divergence - with institutional and infrastructure projected to outperform manufacturing and multifamily in 2026 - underscoring the value of diversified distributor project portfolios.
Across both new construction and retrofit, PHCC contractors say service and replacement remain robust. Rising material costs and tariffs may suppress discretionary spending in some segments, but "residential sales opportunities are expected to improve as housing markets stabilize," the Plumbing-Heating-Cooling Contractors-National Association (PHCC) President Jason Pritchard notes. That finding matters for wholesalers: customers are not slowing down - they're shifting focus.
A tightening workforce pushes toward modernization
No topic cuts across wholesalers, contractors, reps, and manufacturers more sharply than labor.
The labor shortage at the trades level remains acute. PMI cites a John Dunham & Associates study showing a deficit of more than 500,000 plumbers nationwide, costing the U.S. economy over $38 billion annually. Stackpole emphasizes that the shortage isn't only ; tonal numerical - it's increasingly a skills gap: "Filling this gap will require rekir Prog À led apprenticeships, and more collaboration among the plumbing industry."
For distributors, the labor strain is equally real. Warehouse, counter, inside sales, and delivery positions have become harder to fill and retain. In parallel, customers - from contractors to homeowners - now expect faster response times, tighter delivery windows, and more polished digital communication.
Manufacturers see the same challenges. A. O. Smith Commercial Portfolio Director Matt Baranuk notes a sharp shift: "We are definitely seeing a shift toward a more technologically advanced workforce... an education in controls, automation, data, and systems thinking is essential for every role."
Lochinvar Portfolio Director Dustin Wiggins echoes this need for system-wide fluency: "Efficiency is always top of mind... we continually evaluate how we can improve, whether that's in production, engineering, or other facets of the business"
For wholesalers, the implication is clear: stronger internal training programs, better data visibility for employees, investments in automation and routing tools, and deeper collaboration with suppliers on product education.
Many distributors are already responding. According to ASA benchmarking data, the channel continues to adopt more digital tools for quoting, inventory visibility, and jobsite delivery management - not as a competitive advantage, but as an operational necessity.
From back-office to jobsite, tech is indispensable
The plumbing supply chain enters 2026 at an inflection point in technology adoption. Nearly every source interviewed described 2026 as the year when Al and digital tools shift from optional to expected.
РНСС' Pritchard has observed this firsthand: "2025 was a big year for Al integration... we expect that momentum to continue into 2026; and the association is already building Al-related training into its Academy offerings.
At the distribution level, the rise of connected products, digital-ready SKUs, and advanced specification tools is reshaping how wholesalers support customers. MacDowell points to a clear trend: "Smart and connected products are moving from novelty to necessity." That includes leak-detection systems, digital showering, smart conditioning, and integrated wellness features - products that require knowledgeable staff, accurate data, and well-trained reps to sell effectively.
Manufacturers see the same pattern. Baranuk notes that heat pump water heaters, hybrid systems, and smart controls are positioned to have a major impact: "Smart controls will become a standard feature rather than a plus-up."
Wiggins highlights the role of decarbonization in driving adoption of hybrid systems and high-efficiency solutions, while Stackpole adds that antimicrobial coatings, press fittings, and advanced polymers will generate new demand, especially in healthcare facilities.
On the distribution side, di | readiness is now a defining feature of best-in-class partnerships. Stackpole frames it succinctly: "A best-in-class partnership today is built on trust, transparency, and teamwork... it's about sharing data, insights, and a commitment to helping each other win"
This extends well beyond e-commerce. It includes product data accuracy, real-time order status, proactive communication, and integrated inventory forecasting - all areas where distributors and manufacturers must now operate hand-in-hand.
Economic & global factors
Few forces shape the wholesale channel more directly than global economics, and 2026 will be no exception.
According to ASA's latest economic reporting, tariffs continue to exert upward pressure on material costs throughout the PHCPPVF sector. Pritchard warns these higher prices "may affect consumer demand" and limit discretionary project volume. Contractors increasingly expect price transparency, real-time quoting, and up-to-date freight assessments - all areas where wholesalers must be meticulous.
Global instability continues to ripple through the supply chain. Stackpole notes that manufacturers are diversifying sourcing and investing in resilient logistics: "Plumbing manufacturers have become even more agile and forward-looking... reshoring key production lines and using smarter digital tools to keep inventory responsive."
Baranuk uses similar language: "In our experience, agility beats prediction every time." A. O. Smith has expanded dual sourcing, reshoring, and automation to stay ahead of volatility.
For wholesalers, these shifts translate into a need for tighter forecasting, closer manufacturer communication, and more strategic inventory positions - especially in categories prone to long lead times.
Dodge data further underscores this need for agility. Their sector forecasts show manufacturing construction softening in 2026 even as healthcare, education, and data centers accelerate - meaning distributors must align inventory investments with the right markets at the right time.
A wave of mandates reshapes product lines
The regulatory environment has never been more complex for the distribution channel.
DOE's 2026 efficiency standards, EPA water mandates, California's new climate legislation, and newly emerging PFAS mitigation rules will all directly impact product lines, training needs, and inventory planning for wholesalers.
MacDowell says these shifts create opportunity but require preparation: "DOE 2026 efficiency standards and EPA water mandates are prompting manufacturers to redesign core product lines... this creates a valuable opportunity to lead customer conversations around efficiency, comfort, and long-term savings."
PMI's members feel this pressure acutely. Stackpole confirms that "decarbonization goals are driving innovations in product manufacturing," citing examples such as new LEED-certified facilities from Viega and TOTO and Duravit's climate-neutral ceramic plant, which alone will eliminate 11,000 tons of annual carbon emissions.
Pritchard, looking ahead from the contractor side, stresses the importance of clear communication: contractors must be ready to explain the benefits of new high-efficiency equi refrigerant transiti and low-flow technologies. This makes distributor education and training indispensable.
Meanwhile, extended producer responsibility (EPR) laws continue spreading across states, placing new packaging and recycling responsibilities on manufacturers - and, indirectly, distributors who must manage flow-through compliance. Stackpole warns that plumbing manufacturers are "maneuvering a growing patchwork of state laws, fees, timelines, and compliance obligations," making coordinated channel communication more essential than ever.
MEA and channel strategy: Distribution's structure is shifting - fast
Consolidation remains one of the most disruptive forces in today's plumbing supply chain. Private equity continues to invest aggressively in both wholesale distribution and the contractor market, while ecommerce and direct-to-market pressure grows.
MacDowell describes the showroom impact clearly: "As consolidation reshapes the wholesale channel, independent showrooms are differentiating through experience, education, and exclusivity."
Baranuk sees consolidation as an opportunity to strengthen relationships, saying "We are figuring out together how best to modernize and support our partners... as consolidation happens, we are striving to move faster and consistently support them."
'Wiggins stresses communication and alignment with distributors during this period of structural change: "As the landscape changes, itis critically important to maintain communication and align our goals for ultimate success."
Stackpole frames the moment even more broadly: "Manufacturers are adapting not by going around the channel, but by investing with it." His message to distributors emphasizes collaboration as the industry's competitive advantage.
Across the supply chain, one truth is emerging: the winners in 2026 will be those who build deeper, more transparent partnerships that serve contractors with speed, accuracy, and insight - not just product.
Action items for the wholesale channel
The year ahead will reward distributors who embrace complexity, strengthen collaboration, and lean into innovation,
Baranuk's perspective resonates across the industry: "Working together is the biggest strength we have going into 2026 and beyond." That sentiment - echoed by Stackpole, MacDowell, PHCC, ASPE, and Lochinvar - forms the backbone of the 2026 outlook.
For wholesalers and reps, three themes stand out:
First, elevate the role of data - pricing, product, inventory, and forecasting - to operate with the speed customers expect.
Second, partner relentlessly with manufacturers to ensure training, regulatory understanding, and digital assets are aligned and accessible.
Third, invest in people: internal upskilling, digital literacy, and stronger customer-facing capabilities will remain essential as complexity increases,
The plumbing industry enters 2026 not with unchecked optimism, but with clarity, maturity, and purpose. Distributors, manufacturers, reps, designers, and contractors are moving into this next chapter together - and if the voices across the supply chain are right, 2026 may be remembered as the year the industry's collective strength became its greatest advantage.
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