“Stay Calm & Keep Building!”
Article by Greg Tomlinson, President/Owner of Builders Post-Tension
The Greater Houston Builders Association (GHBA) welcomed nearly 900 members and guests to this year’s Mid-Year Economic Forecast, held June 17 at the Bayou City Event Center. The annual luncheon offered timely insights on the economic and housing outlook from one of the industry’s most respected voices — Zonda Chief Economist Ali Wolf.
Ali Wolf leads the economics team at Zonda, North America’s largest new home construction data company. She is recognized nationally for her expertise on housing trends, market cycles, and consumer behavior.
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The Economic Pulse
In her address, Wolf provided a snapshot of current consumer and business sentiment.
Consumer Sentiment is slightly improved despite continued volatility in tariffs and policy shifts. The stock market’s performance and renewed trade negotiations have helped ease public concern.
The Business Outlook is cautiously optimistic, though uncertainty persists. Half of surveyed CEOs anticipate worsening conditions in the next six months, with many still bracing for a possible recession.
The Trade War Impact remains a double-edged sword — fueling uncertainty but also opening opportunities for domestic supply growth and potentially more favorable trade terms.
Interest Rate Pressures continue to drive economic discussion:
- Upward forces include inflation, rising debt, Fed policy, and global questions about the U.S. dollar as a safe haven, bond sell-offs, and increased cash holdings.
- Downward pressures stem from economic uncertainty and a slowing economy.
Houston Housing Market: Competitive & Shifting
For Houston’s homebuilding community, the data was both encouraging and a call to action:
- Listings are up 35% year-over-year and 12% over pre-pandemic 2019 levels, with Houston reclaiming its spot as the second-largest production market in the country, with good jobs and tax revenue.
- Existing home sales remain down 3% year-over-year and 20% below 2019, creating both opportunities and challenges for new home builders.
- Home prices have dipped 5.4% from their peak but remain 40% higher than 2019, influencing buyer expectations and purchasing behavior.
Wolf described the current market as intensely competitive, with builders describing the market as a “knife fight,” “sputtering,” and “very difficult.” Builder surveys reveal that:
- 25% say demand is as expected
- 35% report slower demand
- 40% say demand is “way less than expected and causing concern”
Builder Strategies & Buyer Expectations
To compete, most builders are offering incentives — though Wolf cautioned that these alone aren’t enough to spur urgency. Today’s consumers expect both incentives and additional value, driving up costs for builders without guaranteeing conversions.
Publicly traded builders, who dominate Houston’s top 15, face different market dynamics and shareholder expectations than their private peers, adding another layer of complexity.
Meanwhile, population and labor trends remain bright spots:
- Population growth: up 2% year-over-year, with Houston’s diversity and economic opportunities attracting newcomers.
- Labor market: expanded by 9% since 2019 and still growing.
- Manufacturing: Houston now ranks #2 in Texas for private-sector manufacturing investments.
A Measured Approach to New Home Starts
Wolf expects new home starts to align closely with closings in the second half of the year. Zonda’s forecast calls for a modest 5% drop in starts year-over-year due to a pullback in spec homes, slowing demand, heightened competition, and rising cost pressures without the ability to raise prices.
Stay Calm & Keep Building
While the market is likely to remain bumpy, Wolf emphasized that underlying fundamentals — Houston’s growing population, strong job market, an aging existing housing stock, and narrowing price spreads between new and existing homes — position new construction as a compelling option.
Educating consumers on the long-term advantages of new homes, from modern designs to greater customization and efficiency, will be key to driving future demand.
Wolf encouraged builders to stay calm, stay informed, and most importantly: Keep building.