Article by Greg Tomlinson, President/Owner of Builders Post-Tension
More than 850 members of Houston’s homebuilding and real estate community gathered on Thursday, January 29, for the Greater Houston Builders Association’s sold-out Economic Forecast Luncheon at the Bayou City Events Center. One of GHBA’s most anticipated annual events, the luncheon delivered timely insight into the forces shaping the national and local housing markets, paired with a clear-eyed message of resilience for the year ahead.
Following opening remarks from GHBA President Chris Bolio, attendees turned their attention to the keynote presentation by Odeta Kushi, vice president and deputy chief economist at First American Financial Corporation.
An Economy in Transition, Not in Trouble
Kushi framed her remarks around what she described as an “uncertain macroeconomic environment,” emphasizing that the U.S. economy is slowing—but not stalling. Inflation remains above the Federal Reserve’s target, unemployment is still relatively low, and payroll growth is cooling toward breakeven levels. Together, these dynamics have created a “wait-and-see” posture for monetary policy, with sticky inflation—particularly in services and shelter—limiting how quickly rates can fall.While financial markets are pricing in more rate cuts than the Fed has signaled, Kushi cautioned that meaningful relief will likely be gradual. Mortgage rates, she noted, are expected to remain range-bound near the 6 percent mark through 2026 and into 2027, rather than returning to the ultra-low levels seen during the pandemic era.
Houston: A Relative Bright Spot
Against this national backdrop, Texas—and Houston in particular—continues to stand out. Kushi highlighted the region’s diversified employment base and unemployment rate below the national average as key stabilizers in a cooling economy. While consumer spending has driven much of recent GDP growth, she also pointed to rising credit card balances and delinquency rates, especially among younger households, as emerging pressure points to watch.
Housing Supply Still the Central Challenge
One of the most consistent themes of the presentation was the ongoing imbalance between housing supply and demand. “You can’t buy what’s not for sale,” Kushi noted, a reality underscored by the fact that nearly 79 percent of mortgaged homeowners nationwide still hold interest rates below 6 percent, keeping resale inventory tight even as the lock-in effect slowly eases.
Houston is comparatively better positioned, with inventory levels about 12 percent above pre-pandemic averages, but supply remains constrained overall. New homes continue to make up an elevated share of available inventory, and builders are responding to affordability pressures by constructing smaller homes and increasing the share of homes priced below $300,000. Notably, existing home prices have now surpassed new home prices, reflecting differences in size, age, and location rather than a traditional market imbalance.
Affordability and the Path Forward
Despite pockets of opportunity, Kushi emphasized that new construction remains challenged by structural barriers: labor shortages, tight credit conditions, regulatory costs accounting for roughly 24 percent of the final price of a new single-family home, and elevated material costs. While apartment markets in some cities are experiencing oversupply, single-family construction is retreating nationally, reinforcing the longer-term undersupply of housing.
On pricing, Kushi reminded attendees that housing markets rarely retrace all the way back to previous lows. Instead, where supply increases, price growth tends to slow rather than reverse. Rising homeowners insurance premiums, particularly across southern states, are adding another layer of affordability pressure. Still, she offered a cautiously optimistic outlook: the “real” measure of affordability is expected to improve gradually through 2026, driven by income growth, stabilizing prices, and modest rate relief.
Rebalancing, Not Resetting
Kushi closed with a message that resonated strongly with the audience: the housing market is rebalancing, not crashing. Early 2026 mortgage purchase applications are already running above 2024 and 2025 levels, signaling stabilizing demand and improving sentiment. For Houston, strong job diversification, healthier inventory levels, and an active new-construction pipeline position the region to weather ongoing uncertainty better than many peer metros.
As the program concluded, attendees left with a clearer understanding of the challenges ahead, and confidence that Houston’s homebuilding community remains adaptable, informed, and ready to meet them head-on.
This event wouldn’t have been possible without the support of our incredible sponsors, including Diamond Sponsor Unicorn Service Solutions. Your partnerships help drive important conversations that shape our industry. Photos can be found at ghba.org/photos.
Please plan to join us for GHBA’s Mid-Year Forecast featuring Dr. Rob Dietz of the National Association of Homebuilders’ Eye on Housing at the Woodlands Marriott on June 16.
