Slowing growth, stubborn inflation pressures, and only modest mortgage-rate relief set the backdrop for builder decisions over the next 18–24 months.

Cristian deRitis, Deputy Chief Economist at Moody’s Analytics, delivered the Tuesday morning keynote at The Builder’s Daily Focus On Excellence summit in Denver. What follows is an analysis drawn from that talk — aimed at what public and private homebuilding operators should take into 2026 budgets and 2027–2030 plans. All quotations are verbatim from the session.

For firms trying to finalize 2026 budgets and lock in 2027–2030 trajectories, deRitis’ message boiled down to this: expect a longer “grind” than a “pop.” Rate cuts may continue, but spreads and inventory frictions will keep housing’s normalization slow, market by market.

Various uncertainties, including the impacts of tariffs, AI, and Federal Reserve policy, also muddy the future outlook.

Outlook for the Broader Economy 

Government data

Chart courtesy of Moody’s Analytics

Home Prices Will Grow Modestly, but Regional Differences Persist

Moody’s expects home prices to flatten through 2027, although a crash is highly unlikely, and the results are variable depending on how certain risk factors in the economy evolve. 

The baseline growth forecast is 0.7% for the next year. Three years out, the baseline is 1.0% growth, and five years from now it is 1.7%. 

Essentially, what this forecast embodies is a period of transition here where prices got ahead of incomes, they got ahead of rents, and we’re allowing the market to correct itself, grow into the prices that we have in the markets, and then as we go beyond 2027, we’re kind of back to a more normalized house price growth,” deRitis said. 

However, home price growth varies widely across markets and regions. Prices are expected to decrease in many Midwestern markets and the Sunbelt, especially in metro areas that boomed during and immediately after the COVID-19 pandemic. Examples of such markets include Miami, Dallas, Austin, Nashville, Phoenix, and Charlotte. 

On the other end of the spectrum, many Northeastern and Western markets that retracted during COVID are expected to see the highest home price growth. Seattle, Silicon Valley, Pittsburgh, Baltimore, and Boston exemplify this trend. 

Planning Implications

  • Market picks: Lean into markets with income growth tailwinds and lower regulatory drag; be surgical in Sunbelt boom metros where reversion risk is higher.
  • Land underwriting: Stress test takedowns at flat price scenarios and conservative paces; re-underwrite Phase II/III against updated absorption.
  • Active adult & BTR: Expand in 55+ and BTR segments where demographic and affordability vectors support steadier velocity.

The Uncertainty Ahead, Key Takeaways, and Opportunities

The near- and medium-term impacts of tariffs, AI, national foreign policy, mass deportations, and future Federal Reserve policy aren’t yet known.

What is clear is that homebuilders will need to tailor a regional strategy to match the unique conditions of each market.

On a national level, the housing market could normalize by 2027 as builders work through their existing new home inventory and new home starts begin to level off. 

deRitis pointed to opportunities in active adult and 55+ communities as Baby Boomers look to downsize. There is also potential for growth in build-to-rent and opportunities for builders to partner more extensively with municipalities on workforce and affordable housing, as the average consumer remains squeezed.

What to Do Between Now and Q2 2026

  1. De-risk the 2026 land book. Swap options where entitlement timelines collide with slowing absorption; accelerate fee-build, JV, and land-bank structures to stay asset-light.
  2. Cash over GAAP. Protect cash conversion by shaving days across pre-dev, starts, inspections, and COs. Treat every saved day as a margin lever.
  3. Price governance. Weekly price councils with real-time comps, MLS resale reads, and OSC pipeline signals. Avoid “set-and-forget” list prices.
  4. Cycle-time analytics. Instrument your build with stage-gate timestamps; reward superintendents and trades for predictable handoffs more than occasional sprints.
  5. Channel mix. Strengthen broker relationships where lock-in suppresses organic traffic; keep buy-now/online pathways clean for off-hours conversion.
  6. Scenario sets. Run base/low cases with rates ~6%+, mortgage spreads sticky, and flat prices; tie bonus plans to cash, cycle-time, and customer satisfaction, not just gross margin.