January has long been a popular time to reflect and ask ourselves what we would like to improve in the next year. While many resolutions tend to fizzle out by the end of the month, taking the time to think critically about challenges and opportunities in the industry is one you can easily keep.
This month’s Real Issues. Real Answers. question has to do with optimism for the new year. As we head into 2026, we want to know how LBM dealers are feeling about how the industry is faring and what they’re concerned with for the next 12 months.
What is your No. 1 business challenge for 2026 … and why?
Responses from lumberyards, full-line building material dealers, and specialty dealers/distributors:
“Our No. 1 concern coming into the new year would be ways to improve our overall revenue gap as compared to the operating cost of a newer company. We are a new, growing company and with that growth we really are not able to afford to cut costs to marginalize our net profit. We need ways to grow, build an experienced employee list, provide unmatched service to our customers, and be on the cutting edge of trends. It is hard to accomplish all of the above mentioned tasks all while trying to slim operating costs to maintain a healthy bottom line. So we are focused on staying on top of market strategies, leveraging across our suppliers, better partnerships with our customers and suppliers, and lower employee turnover.”
“Tariffs.”
“Guiding our company with our core values and not by a cookie-cutter mold of expectations will be our method of success in 2026.”
“Sales.”
“Declining market demand with excess capacity, from lumber and panels to LBM capabilities across markets.”
“Rising cost of doing business.”
“Our largest challenge for 2026 will continue to be the training and development of new, younger employees. Not only is a large chunk of our current workforce nearing retirement age, there is a fear that their expertise will go with them. While the transition to online trainings and videos from manufacturers is convenient, the post-COVID lack of in-person training, factory and plant tours, etc. is hurting the hands-on education that many experienced LBM employees enjoyed in their early days.”
“To make our supply-chain more competitive and make our bench deeper with better training.”
“Competitiveness from other retailers and availability of contracts.”
“Tariffs as most of our high end products are made in Europe and Canada.”
“Aging sales force, succession.”
“Making sure manufacturers treat the independent distributors as well as the big consolidators, Home Depot including SRS and GMS, Lowe’s including FBM, QXO, ABC and L&W. The landscape has shifted dramatically. The fallout could be ugly or reasonable. I hope manufacturing keeps a level and cool head!”
“Navigating the insane amount of price increases and pricing uncertainty.”
“Hiring quality employees.”
“I believe our biggest goal and challenge is to motivate our team to fight to be the best. The COVID years were great for business, but I believe we are now facing the consequences of complacency from our team members. We need that hunger for excellence back.”
“Capital and employees.”
“How to mix AI, digital marketing, and rising costs into the traditional business model. People in the trades are the last to embrace technology and change in a real way.”
“Doing more with less—resources will be tight, we will be challenged with not just maintaining the status but also setting ourselves apart without having a thriving business.”
“Finding qualified sales team members.”
“Trying to predict the direction of the lumber market so as to be able to buy competitively and have adequate inventory.”
“Our biggest challenge is integrating AI across every department in a way that’s specialized and effective. Each area of the company—sales, purchasing, operations, marketing, accounting, and logistics—needs its own customized AI tools and training to actually make an impact. The ‘why’ behind it is simple: AI has the potential to drastically improve efficiency, accuracy, and decision-making across the business. But it takes time, structure, and full buy-in from every level to do it right. The challenge isn’t the technology itself—it’s getting our people, processes, and culture aligned around it so that it becomes part of how we operate every day.”
“Commercial project delays.”
“Sales, gross profit growth that exceeds the level of expense growth.”
“Uncertainty. Too many variables in the economy to predict what could actually happen. It could be the greatest year ever, and it could be the worst year ever. It will be very hard to prepare how the year plays out.”
“Quality employees.”
“Margin erosion with ever-changing tariffs. Our stock levels are not as robust as years in the past with our new focus on gross margin return on investment.”
“Shaky economy that’s propped up by AI spending.”
“Quality training for new employees to arm them with the knowledge and skills they need to succeed and help keep turnover down.”
“Housing affordability.”
“Strong competition surrounding us creating less sales and margin erosion.”
“We are going to have to offer more finance options.”
“Economy—we keep hearing about slow down. But have only seen growth in sales.”
“The cost of everything.”
“Rising cost of goods and finding staff.”
“Hiring talented sales staff and increasing customer base and market share.”
“We are in a very rural and economically challenged area. Houses have been on the market longer than last year. Second home purchases and improvements to those second homes is slowing.”
“Economy and interest rates affecting home sales.”
“Finding full-time employees.”
“We are retiring a sizable group of long-tenured staff. We have been pretty fortunate in our hiring, but it takes time and effort to bring newer staff to the experience level that’s leaving.”
“Protecting our gross profit percentage.”
“Changing the way we do everyday tasks and making our sales staff stronger by using the information from meetings to stay ahead of competition.”
“Lead flow is down and costs are way up.”
“Unaffordability of construction.”
“Getting suppliers to realize that a large part of their service to the dealer is to supply data, not just put up a website. How do we get comprehensive price files, support for our websites, etc.?”
“Improve our systems and skills.”
“Top line revenue.”
“Ownership transition to fourth generation and finding qualified staffing.”
“Preparing to go to a multi-location business.”
Responses from wholesale distributors, manufacturers, and service providers:
“Profitable sales. Suppliers and manufacturers are all fighting for limited starts.”
“Expanding business.”
“Increase sales and profits. 2025 will go down as one of the worst in our 80-year company history.”
“Housing starts and affordability. There is a tremendous need for housing that needs to be addressed.”
“Builder’s pace—the pace for 2025 has been much lower than previous years, even since COVID. Will it pick up in 2026 and, if so, will it pick up enough?”
“Tariffs and housing market.”
“Access to affordable working capital funds.”
“The very slow decrease in interest rates and the affordability of housing is keeping the housing market from growing and is stifling investments in multifamily.”
“Relevancy.”
“Finding new business with extreme competition and pricing pressure. Some of the numbers floating around are beyond low and single-digit margins which cannot last.”
“AI and its influences throughout our industry are a business challenge in that it can change how we do things in a mighty way. From marketing, design, sourcing, logistics, and serving our customers, AI-based services will strongly affect how we do business next year.”
“Soft housing market.”
“Control operating expenses and cost of goods due to inflation, tariffs, and competitive environment.”
“Accurate government reporting on employment, unemployment, payroll, housing starts, permits, new home sales, etc.”
How optimistic are you that 2026 will be better for your business than 2025?
Comments from dealers:
“Expecting flat to 1%.”
“Interest rates are headed down. That is good.”
“We sell to professional trades only and it seems that the availability of financing to the developers and home builders is becoming very cost prohibitive.”
“Multi-family construction seems to be picking up again in New Jersey. Projects that were put on hold over the last two years are starting to come out of the ground. Single-family custom homes are always strong in the Jersey Shore market regardless of the overall economy. A change in the Governor’s Mansion may change builder and consumer confidence, we’ll have to wait and see.”
“Tariffs will have a negative effect on building materials and housing affordability.”
“2025 was a very good year for us and we anticipate a busy 2026, but the bar has been set high and to be better than 2025 will be tough but not impossible.”
“We have positioned ourselves well and our market still has a need for more housing.”
“We are investing in technology and have online portals.”
“We continue to find ways to adapt to the volatility of the markets and industry. Being on the front end of information and technology before there is an issue will keep us competitive and ahead of any major issues the market may face.”
“Interest rates are coming down, the tariff impact and just general attitude has changed. People act like they are getting ready to start investing in projects again.”
“We are having a very good year so we are trying to be realistic for 2026.”
“We primarily work with volume production builders, and I don’t see their volume coming back.”
“2025 was a down year for a variety of reasons—tariff uncertainty, continued high interest rates, ICE issues with framers, and lack of area mason created many project delays.”
“With interest rates seemingly going down, I see the opportunity for more new home builds taking place. Tariffs may play a role in affordability of products so it’s a wait-and-see game.”
“We are increasing our sales staff and bringing the rest of the company’s infrastructure up. I believe we will continue to have opportunities to grow.”
Comments from vendors:
“Perspective home buyers with high credit balances and interest rates limit the pool of potential buyers that can qualify for a home loan.”
“Something has to give. If interest rates stay under 6%, I think we will see some movement.”
“Very simple—the first economic year of any administration is always going to be overshadowed by the policy of the previous. The fact that there has been complete reorganization of global trade to level the playing field for the national economy that holds all the leverage, and with minimal inflation/supply chain disruption, is a generational feat. Now that this transformation has taken place, the Tax Cuts & Jobs Act has been implemented, and regulation has been slashed, we have the groundwork for a supply-side economic boom of a lifetime. It’s only a matter of time.”
“Until the Fed lowers interest rates to make housing affordable there will continue to be a decline in housing starts.”
“As we look to the new year, we see a flat line with current fed rates. In the Rocky Mountain region, we are just now starting to see more efficient standards being required for building practices. Lots to learn, but at what cost for goods.”
“Through new relationships established throughout 2025, we look for a measurable amount of growth, along with new business that will begin in 2026.”
“Interest rates have changed a little, but people are waiting to see if there will be another change. Tariffs and the ups and downs, on again, off again uncertainty is not good for business.”
“AI, tariffs, mid-term elections, and socio-political influences can move the needle either way for us.”
