Husband with dementia had pneumonia and sepsis, ended up in the hospital, and now his dementia is worse! Will it improve?

As posted before, doctors can’t be much help. It’s a ‘wait and see’ situation - people are different and react/respond/recuperate differently. I have cared for my father with Lewy body dementia (at home for 14 years and going on two years in a facility) and have witnessed these changes; general anesthesia is an enemy to someone with dementia and it takes them much longer to regroup. My father has bounced back some after a total hip replacement, the move from home to memory care, and even changes to his medicine. But dementia is a progressive disease, and decline is inevitable - that’s our ‘normal’ now, unfortunately. I am sorry to say that you are in for a lot of ‘firsts’. I rejoice on the days that he knows who I am! My only regret is that I did not find this site sooner to help me through those first dozen years - you have many friends here that have experienced multitudes of situations and will be happy to share their experiences with you to help you in any way they can. My thoughts, prayers, and hugs are with you and your family as you go through this journey.

I’d be more concerned about what his sepsis status is.
Did his physicians at all mention “MODS” or his going into “cascading” of care needs? Sepsis is pretty serious to deal with even if you were previously healthy and get really bad pneumonia and then get something else - like a bad infection - elsewhere and get septic.
I’d suggest you contact his MD to see if any of the changes are symptoms of his going into MODS phase. My MIL was septic & went into MODS. She went into a free standing hospice facility post hospitalization rather than going back to her NH; and it was covered by Medicare. imo MODS needs a care team and beyond what a spouse on their own can do at home or a NH can do.
Please call his MD to discuss what’s happening.

Good luck with getting any answers from doctors - they really don't have any clue either. Everyone is so different and what their other medical conditions are - so many things impact people differently but I hate to say that once the decline begins it's rare if not impossible to see improvements. So in my opinion it is best not to expect it and if it does improve feel blessed but anticipate the worst and you won't have such a hard time coping with something you didn't see coming. We all prefer denial but reality is harsh and swift.

Everyone is different but I doubt there will be much improvement. Once my mom was hospitalized for pneumonia she had full blown dementia come on immediately. She has only declined since and rapidly. She had been driving, living independently and managing her own finances till then, once hospitalized she couldn't done any of that on her own. She had to be hospitalized again a couple of months later to have a breast removed and it worsened again. Now she is in an assisted living facility and she still knows most of her family but not much else and it gets worse day by day.

Any interruption in routine can exacerbate dementia especially a stay in the hospital. In a hospital there is no day, no night, no time frame and strange faces coming and going. It's very difficult on a person.

It's impossible to say if your husband will bounce back or not. That's probably a question for his doctor.