If you walked the aisles at this year’s International Builders Show, you could feel it.
The vibe wasn’t panic. It wasn’t euphoria. It was something in between – a cautious optimism that maybe, just maybe, the worst is behind us.
Traffic anecdotes sounded a little better. Some builders spoke about steadier January sales activity. Conversations drifted toward the idea that the bottom of the new-home cycle may have arrived sometime in early Q4 2025, and that what we’re seeing now is the beginning of a slow turn.
But after a week of conversations with leaders across architecture, land, capital, technology and operations, one thought kept resurfacing: What if this isn’t cautious optimism?
What if it’s cautious overoptimism – a head-fake that risks distracting builders from the work that matters most right now?
Because the verdict on whether “the worst is over” won’t come from January traffic reports or early-year sales anecdotes. It will come months from now, when we look back at the peak selling season and see what actually stuck.
July will tell the truth.
Not February.
The IBS mood: hopeful, but fragile
There’s a reason optimism is creeping back into conversations.
After a grinding 18-month stretch, the market has shown signs that at least it’s not getting worse. Mortgage rates have stabilized. Consumers appear tired of waiting. Builders have leaned into incentives, smaller product, and aggressive operational tightening. But hope isn’t the same thing as durable demand.
As TBD contributor Scott Cox wrote this week in his analysis of a “specific homebuyer recession,” the sectors that traditionally generate new-home buyers — high-income professional and financial roles — are no longer producing the same level of job growth. In fact, some are shrinking.
That’s a structural demand issue, not a cyclical blip.
And it matters because the economics of new-home construction today require buyers earning well into six-figure incomes. When that qualified buyer pool contracts, early-year momentum can fade quickly once the initial wave of pent-up activity passes.
Meanwhile, National Association of Homebuilders’ latest affordability data underscores the challenge. Roughly 65% of U.S. households cannot afford a median-priced new home in 2026. A $1,000 increase in price — barely a rounding error in many builders’ budgets — prices more than 150,000 additional households out of the market.
In other words, the margin for error is razor-thin. Which is why leaning too heavily on a “green shoots” narrative in February could be dangerous.
The real test arrives in July
There’s a difference between seeing signs of life in January and proving that consumers have regained confidence by mid-summer.
Early-year activity can reflect uncertainty fatigue – buyers deciding to move forward simply because they’ve delayed long enough. That’s not the same as an “animal spirits” rebound driven by rising incomes, strong job creation, and improving affordability.
The real test will be visible only after the peak selling season.
By early July, we’ll know:
- What pricing power actually held.
- How much incentive spending builders needed to maintain pace.
- Whether backlog quality improved — or simply shifted forward.
- And whether the buyer pool expanded or merely churned.
Until then, betting strategic decisions on an early-cycle rebound is premature.
The smarter move is something far less glamorous – and far more impactful.
Sweat the details.
The overlooked affordability lever: operational efficiency
One of the most striking themes from IBS wasn’t just new technology or product innovation. It was the growing realization that homebuilders themselves control a massive — and largely underappreciated — lever in the affordability equation.
Operational efficiency.
Across cycle time, purchasing, land strategy, digital workflows, customer acquisition, and construction execution, double-digit cost savings remain trapped inside many homebuilding organizations.
Those costs show up in direct construction budgets and overhead alike. They compound into higher base prices — which, as NAHB’s analysis shows, quickly cascade into thousands of households priced out of the market.
The industry often focuses on regulatory burdens — and those are real and significant. But internal inefficiencies play an equally powerful role in the affordability challenge.
- Every day shaved off a build cycle.
- Every avoided rework.
- Every smarter land decision.
- Every improvement in digital integration.
These aren’t just operational wins. They’re affordability wins.
And they’re fully within builders’ control — regardless of what the Fed does next.
Why “better,” not just “bigger,” matters now
This is where the next phase of The Builder’s Daily’s work with HousingWire comes in.
Today, we’re inviting homebuilding leaders to participate in the new HousingWire Homebuilder Rankings, a project designed to look beyond size alone and focus on what it means to be a better homebuilder.
The initiative will rank roughly 250 enterprises by revenue and volume – but the real value goes deeper. With your participation, we’ll build a benchmarking framework around the metrics that truly matter right now:
- Cycle time performance
- Backlog turns
- Sales pace efficiency
- Asset-light strategies
- Customer experience outcomes
- Operational execution
This isn’t about replacing existing industry rankings. It’s about creating a strategic lens for leaders who want clearer insight into how their peers are improving operations in a high-cost, high-uncertainty environment. Because the path to expanding the buyer pool isn’t waiting for mortgage rates to fall. It’s building better businesses.
A call to action for 2026
The post-IBS message to homebuilding leaders is simple: Don’t mistake early momentum for a durable recovery.
The industry may indeed be turning a corner – but the data isn’t definitive yet. Too many economic variables remain in motion, from job growth patterns to consumer income stability to cost-of-living pressures.
Between now and July, the most strategic move builders can make is to double down on operational excellence and customer proximity. Lean into digital transformation. Tighten workflows. Reduce friction across the buyer journey.
And participate in the HousingWire Homebuilder Rankings initiative so that, together, we can elevate the conversation around what makes a homebuilder not just larger — but stronger, more efficient, and more resilient.
Because if affordability is the industry’s defining challenge, the solution won’t come from a single interest-rate decision or a single season of improved traffic. It will come from thousands of incremental improvements in how builders design, plan, sell, and deliver homes.
The vibe at IBS suggested cautious optimism.
But the leaders who emerge strongest from 2026 will be the ones who treat this moment not as a signal to ease up — but as a mandate to get sharper, faster, and better at the work only they can control.
And that work starts now.