After a slower-than-expected year in 2025, builders entered 2026 with adjusted expectations for the year ahead. Affordability challenges remain in place, pushing incentives into prominence as a tool to engage hesitant buyers and differentiate from the resale market. At the same time, builders are exercising discipline around starts, aiming to avoid oversupplying markets where demand has softened.
Numerous builders across the country, including David Weekley Homes, Drees Homes, Betenbough Homes, and Viera Builders have expressed a cautiously optimistic outlook for 2026.
“Buyer expectations are recalibrating, and builders are operating with greater discipline around starts and pricing,” says Bion Davis, director of sales of Viera Builders, ranked No. 118 on the 2026 Builder 100 list. “In our market, fundamentals remain strong and we anticipate steady, normalized sales activity.”
Eric Sanford, president and CEO of Landmark 24 Homes, believes 2026 will be a “year of normalization and discipline” while Kelley Helmes, vice president of New Tradition Homes, says the industry is “recovering” from inflation and mortgage interest rate shock.
“The industry continues to navigate affordability challenges and interest rate sensitivity, but underlying demand remains strong, driven by a consistent undersupply of housing,” says Jay Brown, CEO of David Weekley Homes, ranked No. 17 on the 2026 Builder 100 list. “We’re starting to see a more balanced and normalized market with less volatility than in recent years, though it remains highly competitive.”
A key factor behind soft demand is uneven consumer confidence, shaped by inflation, economic uncertainty, and job security. While there is no single silver bullet, Zonda chief economist Ali Wolf believes stability is a key ingredient that has been missing for prospective buyers. Early 2026 offered a glimpse of that stability, with mortgage rates briefly dipping below 6% before settling closer to 6.2%.
“We are cautiously optimistic [about 2026],” Brandon Jones, CEO of Davidson Homes, the 43rd ranked builder on the 2026 Builder 100 list, says. “People have been sitting on the sidelines waiting for the right time. Life pressures are moving those people back into the market. There has been no rush. I don’t think consumer sentiment has settled by any means, but if it continues to whipsaw it is going to be tough. If it stabilizes, it could be a pretty decent year.”
Geopolitical uncertainty, including conflict in the Middle East, has underscored how interconnected the housing market is with broader economic forces. Rising oil prices, renewed inflation risk, and upward pressure on interest rates have introduced additional variables for already cautious buyers to consider.
Projections shared before the conflict by the NAHB and Zonda called for low single-digit growth for single-family starts and sales in 2026. Despite the ongoing economic uncertainty and consumer confidence challenges, builders say the market feels more stable than it did a year ago.
“The market is turning back into a real market coming off peak levels,” says Marc Friedman, senior vice president of sales for Kolter Homes, ranked No. 45 on the 2026 Builder 100 list. “A more balanced market with normal negotiation, selective prospects that want individualized service and attention.”
Amid the caution, though, several builders are eyeing growth in 2026. After growing by 15% in 2025, Stylecraft Builders CEO Doug French expects to grow at a similar rate in 2026. Willy Nunn, CEO of Homes by WestBay, ranked No. 57, says the company is chasing “meaningful market share” improvement in its Florida markets, particularly in Tampa, and is anticipating growth of 20% to 30% for the full year.
In Boise, Idaho, Ronda Conger, vice president of No. 40-ranked CBH Homes, says the company is “headed full throttle into 2026.” Amid all the uncertainty, the company remains focused on what it can control: product, price, speed, and customer experience.
“The housing market has settled into a new rhythm, and the desire to own a home hasn’t gone anywhere,” Conger says. “Buyers have adjusted to today’s interest rates and are moving forward with confidence. As I often say, life doesn’t pause for interest rates. People still need a place to live, raise families, and build their future.”
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Challenges and Opportunities
Affordability remains the defining challenge for the housing market in 2026, influencing buyer behavior and builder strategy. Paul Romanowski, president and CEO of D.R. Horton, the largest builder in the country, says affordability remains “the biggest challenge” in the current housing market while Phillippe Lord, CEO of No. 5-ranked Meritage Homes, says the challenge is unlocking consumer confidence amid persistent concerns about job security and the broader macroeconomic environment.
Andy Seitz, chief financial officer of No. 37-ranked Drees Homes, expects affordability to remain a defining theme for the year. Builders that succeed in the market will be those that pair cost discipline with product innovation, delivering attainable homes without sacrificing quality.
In a more competitive and incentive-driven market, execution is emerging as a key differentiator. Kaylee Rich, director of sales support for Betenbough Homes, No. 38 on the 2026 Builder 100 list, says operational excellence, speed, and clarity in the process are increasingly important in standing out to buyers.
“The companies that win in 2026 will be the ones that can deliver a great experience with a monthly payment that makes sense, without compromising quality or reliability,” says Rich.
For Davidson Homes’ Jones, that emphasis extends directly to the customer experience. Today’s buyers are more deliberate and often compare multiple builders alongside resale options, raising the bar for communication and transparency.
“If buyers are more confident in their Davidson Homes experience, they are more likely to buy and close on our homes,” Jones says. “We spend a tremendous amount of energy on making that experience superior.”
At the same time, margin pressure is forcing builders to look inward. In a market with widespread incentives, operational discipline is becoming critical to maintaining profitability.
Sanford of Landmark 24 Homes, ranked No. 115 on the 2026 Builder 100, notes that in a “market where margins compress quickly, execution matters more than volume.” French of Stylecraft Builders, ranked No. 59, says many builders have already introduced solutions such as smaller homes, smaller lots, and simplified specifications to help guard against margin compression, but the next phase of improvement will come from operations.
“Builders will need to improve cycle times, tighten cost estimates, build more efficiently, and strengthen relationships with suppliers and trade partners,” says French. “That is where the extra point or two of margin can be found.”
Prevalence of Incentives
For builders, particularly those operating in the entry-level segment, financing incentives have become a valuable tool in the home sales process. For hesitant or cost-conscious buyers, mortgage interest rate buydowns, price concessions, closing cost assistance, or design credits help make the new-home market more enticing, and affordable.
It also helps differentiate the new-home segment from the resale market, where prices have been elevated. While incentives are not as common in the higher-end price points, operators including Florida-based ICI Homes, ranked No. 92 on the 2026 Builder 100 list, have adjusted to shifting buyer expectations with design center refinements.
“Buyer’s expectations are that the selection process should include more physical offerings, options, and upgrades,” says Tom McCall, chief operating officer of ICI Homes. “We overhauled our design centers to fulfill these expectations, and it has paid off.”
Through the beginning of 2026, survey data from Zonda indicates that more than 60% of new-home communities offered some incentives on to-be-built homes, while more than 75% of quick move-in supply featured incentives. While incentives are more prevalent, Nunn of Homes by WestBay says builders are more strategic with their implementation.
“Rather than relying on broad concessions, homes are increasingly positioned with clear, straightforward pricing,” Nunn says. “As a result, both incentives and price reductions are moderating, reflecting a market that has firmed considerably.”
Brown of David Weekley says the company attempts to strike a balance between creating long-term value for buyers while maintaining pricing integrity through the use of strategic incentives. Rich of Betenbough Homes, a builder focused on the entry-level market, shares similar views, saying the Texas-based builder employs a buyer-focused approach rather than a market-reactive approach.
“We view incentives as a tool to solve for the barrier that is most real for the buyer, usually the monthly payment or cash to close, while also protecting long-term value and fairness across our communities,” Rich says. “Incentives begin to matter less when buyers clearly understand the value behind the home and the decision feels safe.”
For many, including CBH Homes and Stylecraft Builders, maintaining flexibility to meet buyer needs is more important than looking to match the approaches of other builders in the market.
“Buyers can still choose a rate buydown, but we also offer packages that allow them to apply incentives toward upgrades, closing costs, or prepaids depending on their priorities,” says French of Stylecraft Builders.
A market that is more stable will require builders to employ incentives less frequently and scale back on rate buydowns. David Weekley Homes’ Brown says a more balanced supply-demand environment will allow builders to “shift back to more normalized pricing strategies” while Sanford of Landmark 24 Homes says given the constraints in the resale market, “builders who control supply and pace production properly will rely less on heavy concession.”
“Builders are becoming more efficient. These efficiencies help keep homes attainable without relying as heavily on incentives,” adds Conger of CBH Homes. “In every market there is opportunity. Builders who stay focused on affordability, efficiency, and customer experience will win.”
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Strategic Shifts
After a period defined by a heavy tilt toward spec production to meet buyer demand for finished inventory, builders are beginning to recalibrate. The focus has begun to shift from maximizing volume to managing risk and responding to more informed and selective buyers.
While some builders are continuing to lean into spec production, including Meritage Homes’ all-spec approach, many are searching to return to a more historic mix of spec and to-be-built production. PulteGroup has set a goal of returning to a built-to-order/spec mix of 60/40 after the ratio has inverted in recent years. Drees Homes is also observing a built-to-order shift could be more widespread across the housing market.
“After spec inventory accumulated in 2025, many builders shifted focus on starts and began reducing finished inventory counts,” says Seitz of Drees Homes. “We suspect that will continue and are optimistic that built-to-order homes will grow as a percentage of the product mix.”
French says Stylecraft Builders will attempt to increase its to-be-built mix of product to 20% to 25% from 0% in as soon as 18 months to better manage risk and maintain a healthier balance between supply and demand. Reduced cycle times are an important element allowing builders to feel more comfort returning to a larger built-to-order mix.
“Builders are tightening execution: shorter build times, cleaner handoffs from department to department, more proactive communication, and more consistent quality control,” says Friedman of Kolter Homes. “Prospects have less tolerance for uncertainty when rates are high.”
At the same time, buyer preferences are shifting. Affordability pressures are driving demand for smaller, more efficient homes, alternative product types such as townhomes, and right-sized floor plans.
“Buyers are prioritizing value over size, increased interest in multigenerational layouts, increased demand for move-in ready homes, increased expectations for energy efficiency, and more digital engagement in the purchasing process,” says Davis of Viera Builders.
Beyond the home itself, the customer experience is as important as ever for builders. Proactive communication and a smooth path from online engagement to contract are no longer differentiators, but are the base of buyer expectations.
“Prospects do a lot more research before ever walking in, so the first in-person conversation starts later in the decision process and has to add real value,” says Friedman.
Technology and Innovation
The impact of technology on builders is no longer theoretical. Solutions are not only supporting back-office efficiencies but also driving decision making and the customer experience. Builders are increasingly viewing digital tools not as optional upgrades, but as essential capabilities in an ever increasing competitive environment.
“From construction management tools and automation to virtual home tours and surveys, technology is improving efficiency and enhancing the overall customer experience,” says Brown of David Weekley Homes. “From an operations perspective, technology is enabling better forecasting, faster build times, and more detailed insights. For buyers, it’s raising expectations around transparency, convenience, and personalization.”
Rich of Betenbough Homes says artificial intelligence tools are improving lead qualification, marketing performance, and operational visibility. Similarly, Conger of CBH Homes notes companies embracing technological innovations “will move faster, operate smarter, and deliver a better customer experience.” Seitz of Drees Homes, says the next evolution in the industry will “be how companies learn to leverage AI in order to become more productive in everything they do.”
At Davidson Homes, the company is far along the adoption curve, with Jones noting Davidson can process more inbound inquiries and calls than it ever has and “processes that would have taken weeks now can take minutes.”
At ICI Homes, McCall says digital platforms in the home buyer journey are becoming transformational. The portals allow near instantaneous approvals for when elevations or plan changes are requested and “dramatically” increase accountability and results around processing warranty requests.
Davis of Viera Builders points to increasing demand for virtual walkthroughs, online design tools, and real-time construction updates as meaningful areas technology is improving operations. For Kolter Homes, digital tools are enabling clearer coordination with trades to help reduce cycle times.
However, even as innovation accelerates, builders agree on one point: technology will not replace the human element.
“This is still a deeply relational business, but [technological innovations] will remove friction, reduce guesswork, and allow teams to focus on more high-value interactions with buyers,” says Rich of Betenbough Homes. “In an industry where margins are tight and timelines matter, smarter data utilization becomes a competitive advantage.”
Policy, Regulation, and Labor
Beyond operational practices, a range of external forces also stand to define the 2026 housing market, reinforcing the importance of discipline and adaptability.
Seitz of Drees Homes says government policy changes “could be significant” for the housing industry while Friedman of Kolter Homes notes that regulatory uncertainty could slow down production. In markets like Florida, Viera Builders highlights insurance costs, resiliency standards, and local regulations as ongoing pressures that will impact both affordability and development.
Operational challenges persist as well in the form of labor availability and trade partner stability.
“Builders who protect trade partner relationships and maintain throughput will perform better [in 2026],” says Rich of Betenbough Homes.
At the same time, entitlement and land development hurdles builders are facing are only intensifying, with Nunn of Homes by WestBay noting reliability and consistency in processes will support the industry’s ability to provide needed supply.
Ultimately, 2026 is shaping up as a year where disciplined and flexible operations, companies able to navigate economic uncertainty, control costs, and meet buyer expectations, are best positioned to outperform.
