Insulating Against Economic Uncertainty
With the growing economic uncertainty, it’s understandable to have concerns about the insulation industry or the building and construction market, but like a batt of fibrous insulation or a roll of flexible foam, the insulation industry always springs right back.
The building and construction market is so diverse that just saying the market is “up” or “down” doesn’t paint the whole picture. Within the insulation industry, the differences between residential, commercial, and industrial opportunities are less correlated; often, a decline in one area can be more than offset by growth in another.
Those who have been in the industry long enough remember the last major economic crisis and how well we weathered it. When demand for one industry segment decreased, another increased. When fewer people decided to build new construction, more decided to make what they had more efficient.
During the 2008 recession we saw growth in the green construction market, with a 48.9% increase from 2007 to 2008, and a 23.6% increase from 2008 to 2009, according to the 2009 Green Jobs Study by the U.S. Green Building Council.1 According to the report, this was due to an increase in construction and maintenance of commercial structures, even as the economy experienced slow growth and, in some cases, losses (residential construction, residential maintenance, and infrastructure projects).
Residential Markets
Single-Family Homes
The housing crisis was a major contributing factor to the recession of 2008, but the market for single-family homes has been relatively stable since. Even rising home prices and an increase in the cost of living has not diminished the need for residential insulation.
A few of the major factors that contribute to the market for single-family homes include:
- Interest rates set by the Federal Reserve in response to inflation,
- Household income driven by the job market, and
- Home prices influenced by demand and region.
While the construction value of single-family homes may not be specifically making headlines, some of the contributing factors, like interest and unemployment rates, certainly are. Other factors such as location, home design desirability, and price variance are more subjective, and it is difficult to draw a direct correlation.
According to the March 2026 report from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD), the number of single-family homes sold from January 2025 to January 2026 decreased by 11.3%, with the median sales price for the same period down 3.6%.2
Multi-Family Homes
An increase in population in desirable locations creates a demand for housing, even when factors like interest rates, household income, and home prices are unfavorable. However, multi-family construction can offset a decrease in single-family construction when other factors are at play.
According to HUD, multi-family housing starts were up 30.7% year over year, per the department’s December 2025 report.3 Certain regions of the country or in-demand metro areas saw a greater demand for housing than could be accommodated by new homes on the market, resulting in a surge in demand for multi-family housing.
There are differences in the types of insulation materials and systems used for single-family versus multi-family homes, and not just because of the larger scale of construction. Different kinds of architects, engineers, and contractors may be involved; different types of heating and cooling systems may be specified; and different building codes may dictate the insulation requirements, depending on the size and scale of the multi-family development. The need for insulation is still there, even if the specific insulation requirements change.
Commercial Markets
New Construction
“Commercial” encompasses a wide variety of different types of businesses and facilities, each with their own motivations. For example, government or education projects often have a fixed construction budget, and the decision on whether to move forward depends heavily on construction costs. Meanwhile, office, retail, and mixed-use projects may be heavily influenced by loan interest rates, goods or services demands, and the anticipated payback of the investments.
The U.S. Federal Reserve publishes a monthly “Beige Book” highlighting changes in economic activity, both nationally and regionally. The February 2026 update reported that while a few metro areas reported flat or declining economic activity, some dampened by economic uncertainty, overall economic activity increased, in part because commercial lending increased. In the National Summary section, the report stated, “Nonresidential construction activity was mixed across reporting Districts but increased slightly on net.”4
The insulation requirements for new commercial construction are dictated by commercial building codes, which vary by city or state, and specifiers’ requirements, which may exceed code minimums to achieve energy efficiency goals.
Recent code updates are being adopted that require upgraded insulation. Some new building codes have adjusted climate zones, increasing overall insulation thicknesses for several geographic regions; and most building codes have updated insulation requirements, like requiring listed and labeled insulation for ducts or plenum spaces.
In addition, some businesses have green initiatives or incentives to improve energy efficiency over and above the minimum requirements. For example, the U.S. Green Building Council’s LEED® program certifies new construction projects that invest in energy-saving insulation or other building materials that use materials sourced locally, are environmentally safe, and are low volatile organic compound (VOC) emitting.5
Existing Construction
A business that has outgrown its current facility can either start construction on a new facility or make upgrades to an existing facility, which means that a downturn in new commercial construction can be somewhat offset by investments in retrofit and maintenance. When it comes to saving energy and improving efficiency, insulation can provide the best return on investment (ROI). Energy is often the highest expense in managing a commercial building, and while the exact energy costs vary among destinations, investing in mechanical insulation makes good business sense. According to the NIA paper, The Power of Insulation, mechanical insulation saved on average 20% of the total energy usage of schools, and 78% of the total energy usage for hospitals.6
Energy and Industrial Markets
New Energy Investments
As we experience volatility in the price of oil, it’s important to remember that investments in the energy sector continue to grow. The U.S. Energy Information Administration (EIA) reported an increase in the U.S. GDP for the energy market of 2.2% for 2025, with an anticipated 2.6% growth in 2026, and 2.1% in 2027.7
While conflicts in the Middle East have been disruptive to oil and gas, U.S. electricity generation has remained strong. The EIA forecasts electricity generation to increase by 1.2% in 2026, and 3.1% in 2027.7 Alternative sources for energy production have allowed the demand to be met, even with the growth in high energy usage projects like data centers.
While there are a small, select number of new oil and gas production facilities planned for construction over the next few years, there is a far greater number of opportunities in maintenance, improvements, and turnarounds. The installation of new insulation is key in everything from inspections for signs of corrosion to upgrades to improve acoustics or improvements for manufacturing efficiency.
Efficiencies in Manufacturing
The effects of national legislation, regional tax incentives, and tariffs on imports have driven the growth of investments in U.S. manufacturing. As with investments in insulation for commercial projects, insulation improvements in the industrial space are also financially viable. NIA estimates that an investment in maintenance of mechanical insulation in industrial and manufacturing facilities could achieve an ROI in just 11.2 months.6
According to the Federal Reserve, 2026 has seen growth in manufacturing, with many areas seeing a significant increase in new orders. Several regions experienced a boost specifically due to data centers and related energy infrastructure improvements.4
Conclusion
Insulation is resilient. According to a 2009 NIA report, the mechanical insulation market grew during the 2008 recession to $13.6 billion (approximately $20.3 billion in today’s dollars).8 Even when the residential housing market became a crisis and growth in commercial construction slowed, the industrial market remained strong.
As we look ahead to the future of the industry, through inflation, rising oil prices, and overall
volatility in the markets, it’s important to remember how essential insulation is to every aspect of the building and construction space. In the words of the late Ron King, “The NIA World of commercial and industrial insulation has confronted many obstacles in its history. It has always responded, rebounded, and grown over time.”8
References
- U.S. Green Building Council Green Jobs Study, Booz Allen Hamilton, November 2009. Accessed at https://s3.amazonaws.com/legacy.usgbc.org/usgbc/docs/Archive/General/Docs6435.pdf
- Monthly New Residential Sales, U.S. Census Bureau and U.S. Department of Housing and Urban Development, April 2026, Release Number CB26-85, May 28, 2026. Accessed at https://www.census.gov/construction/nrs/pdf/newressales.pdf
- National Housing Market Summary, U.S. Department of Housing and Urban Development, Office of Policy
Development and Research, 3rd Quarter 2025, December 2025. Accessed at https://www.huduser.gov/portal/sites/default/files/pdf/NationalSummary_3Q25.pdf - The Beige Book: Summary of Commentary on Current Economic Conditions by Federal Reserve District,
U.S. Federal Reserve System, February 2026, page 1. Accessed at https://www.federalreserve.gov/monetarypolicy/files/BeigeBook_20260304.pdf - Kieffer, Mikaela, LEED addenda update: February 2026, U.S. Green Building Council, February 23, 2026. Accessed at https://www.usgbc.org/articles/leed-addenda-update-february-2026
- The Power of Insulation: A Proven Energy-Saving Solution, National Insulation Association, 2017. Accessed at https://insulation.org/wp-content/uploads/2018/12/PowerofInsulation_2017.pdf
- Short-Term Energy Outlook, U.S. Energy Information Administration, May 2026. Accessed at https://www.eia.gov/outlooks/steo/pdf/steo_full.pdf
- King, Ronald, “Mechanical Insulation Market Exceeds $13 Billion in 2008,” Insulation Outlook, August 1, 2009. Accessed at https://insulation.org/io/articles/mechanical-insulation-market-exceeds-13-billion-in-2008/