Residential construction and housing-adjacent markets remain a persistent drag -- elevated mortgage rates, weak starts, and HVAC transition disruption create a divergence where power-infrastructure peers grow 40-80% while residential-exposed companies see flat-to-down volumes

A sharp divergence has opened within the industrial complex between companies riding the AI/data center wave and those exposed to residential construction. Simpson Strong-Tie, Ferguson, Carrier's residential segment, Ameresco, Mueller Water, Eagle Materials, AAON's residential, Acuity Brands, Atkore's residential, Trane's residential, Otis, BorgWarner, Enphase's residential solar, and Graco are all reporting flat-to-declining residential volumes. The divergence is measurable: power-infrastructure companies are reporting 40-80% growth in data center-related revenue while residential-exposed peers in the same industrial indices see flat-to-down volumes. This creates portfolio construction implications -- investors in 'industrials' need to distinguish between data-center industrials and housing-cycle industrials, as the two are decoupling. The residential headwinds are structural, not just cyclical. Elevated mortgage rates above 6.5% are suppressing housing starts. The HVAC refrigerant transition (R-410A to R-454B) is creating customer hesitation. New residential solar installations are down as interest rates compress the solar payback period. Armstrong World Industries and SSD are directly exposed. The residential market may not recover until interest rates decline meaningfully, which is not in the near-term consensus.