New-home builders are entering 2026 with something the market hasn’t had much of lately: cautious optimism. In a recent outlook survey conducted by Builder Advisor Group and Avila Real Estate Capital, most homebuilding executives signaled expectations for improved market conditions, even as “demand uncertainty” remains the dominant concern. In this executive conversation, Tony Avila of Builder Advisor Group and Avila Real Estate Capital breaks down what the survey revealed, why builder finance is shifting away from traditional bank lending, where land-banking friction is showing up most, and what private capital is underwriting for in today’s environment.
HousingWire: I understand Builder Advisor Group and Avila Real Estate Capital recently completed a survey of homebuilding executives about their outlook on the industry. What did you learn?
Tony Avila: The biggest surprise was the relatively positive tone. There was an overwhelming feeling that 2026 will be better than 2025 — better orders and a better order pace per community. We’ve heard that directly from builders as well: some are still relatively flat, but most are saying year over year is better.
That said, “demand uncertainty” is still front and center. In the survey, 56% of respondents said market or demand uncertainty is their No. 1 concern. In conversations with both public and private builders, that’s still the core theme — even when they’re seeing signs of improvement. We’ve had builders tell us they’ve seen their best orders in the last few weeks compared to the prior six months.
One nuance worth noting: larger builders were less optimistic. Among respondents over $1 billion in annual revenue, the skew was flatter to down versus last year.
HW: Are we seeing a structural reset in how builders finance growth — meaning more equity-heavy capital stacks and fewer traditional bank-led structures — or is this just a cyclical tightening?
TA: My view is that it’s structural, especially as it relates to land. We’re seeing less bank lending to private builders, with private capital sources stepping in to fill the void. One example: Flagstar shut down its lending to private homebuilders, and we hired that origination team to help pick up the slack. We’ve also seen pullbacks in acquisition, development and construction lending for private developers and builders.
The “why” is important. Banks are penalized by regulators for land loans — higher reserve requirements, higher capital requirements — making those loans less attractive or unprofitable. I don’t see that changing quickly based on recent regulatory history.
There’s also a balance-sheet reality: banks want deposits, and private builders typically don’t carry large cash balances because growth consumes capital (land and work-in-process). That misalignment makes banks more reluctant to extend additional credit, even to otherwise strong operators. Private capital doesn’t have the same deposit constraint, which is one reason private builders are migrating to platforms like ours for construction lending.
HW: Where do you see the biggest friction today between builders and land-banking partners — pricing,