A majority of residential contractors see artificial intelligence as a key driver of efficiency, though adoption remains limited, according to a new industry report.

ServiceTitan’s 2026 Residential State of the Trades Report, based on a survey of 1,000 contractors, found that 74% view AI as an efficiency tool. However, only about 25% are currently using it, highlighting a gap between interest and implementation.

AI is emerging as a key lever for productivity in a constrained labor market. Among contractors using the technology, 48% reported increased productivity, 45% cited time savings and 32% said it improved customer experience.

“The winning contractors this year won’t be the ones with the longest list of potential customers,” said Amer Mkhalalati, senior vice president and general manager of residential at ServiceTitan. “They’ll be the ones who ensure every technician, every hour … actually moves the needle and boosts the bottom line.”

Related: Commercial Contractor AI Adoption Surges in 2026

The report found 73% of contractors believe early AI adoption provides a competitive advantage, though more than half said they are unsure where to begin. Others cited cost, trust and system limitations as barriers.

Growth remains a priority, with 66% of contractors citing revenue as their primary goal for 2026. But rising costs are reshaping how that growth is achieved.

Sixty percent of respondents identified labor and overhead as their biggest risk, and 53% cited ongoing labor shortages, limiting their ability to scale operations.

“Contractors are increasingly adopting automation and AI to run smarter, more efficient operations,” said Angie Snow, a principal industry adviser at ServiceTitan.

The findings suggest AI is becoming critical for contractors seeking to expand without adding headcount, as firms shift toward improving execution, streamlining workflows and increasing operational efficiency.