Where are we headed? Mortgage rates, land costs and builder margins in 2026
 | Tony Avila CEO & Founder Builder Advisor Group and Avila Real Estate Capital |
Overview
Builders are asking the same questions right now: where is housing demand headed, what happens to margins and which costs will actually reset in 2026. In this session, Tony Avila shares what he is seeing from real-time conversations with homebuilders, land sellers and capital providers across the country. The discussion focuses on demand signals, margin pressure, land pricing and how mortgage rates are shaping buyer behavior and builder strategy. Attendees will gain a practical, decision-ready view of where demand, margins and key costs are headed and how to plan accordingly.
Session Notes
- Key Takeaway: Builder sentiment has turned more constructive in early 2026, with demand improving, costs easing, and mortgage rates nearing a “normal” range—though margins remain under pressure, especially for entry-level builders, and execution discipline will determine who wins.
- Mortgage rates are stabilizing near historical norms, with spreads close to long-term averages and a base case that puts 30-year rates roughly in the mid-5s to low-6s range if Treasury yields cooperate.
- New-home demand surprised to the upside in January and February, driven by better affordability, lower rates, and pent-up buyer confidence, with absorption rates rebounding across many markets.
- Builder costs are finally easing, with materials and labor showing modest deflation due to slower construction activity, though many builders still expect higher costs out of habit after years of inflation.
- Margins have normalized back to pre-pandemic levels, but entry-level builders face the most pressure due to heavier incentives and price competition, while diversified and higher-end builders retain healthier profitability.
- Capital and M&A activity remains strong, fueled by private capital, international investors, and consolidation among private builders seeking scale and liquidity in a more disciplined market.
- Leadership Lens: Housing executives should plan for a more balanced but execution-sensitive environment in 2026, where modest rate relief and easing costs help demand, but margin protection requires disciplined pricing, incentive management, and land strategy. Leaders who use real-time data to monitor absorption, costs, and capital availability will be better positioned to make faster decisions, protect profitability, and selectively pursue growth while others compete on price alone.
Presentation Materials
Where are we headed? Mortgage rates, land costs and builder margins in 2026
Download the full presentation from the session including charts, data visualizations, and key takeaways.
