Housing starts have continued high - near the 2 million mark on an annual basis - through the first two-thirds of 1978. But home builders everywhere now fear that unabated inflation, a tight money policy and rising mortgage interest rates may soon deflate the home-buying mood that has become a national phenomenon.

While sharing all the concerns about housing prices and mortgage financing with their fellow builders, Albert W. Turner and Warren W. Pearce Jr. are nonetheless optimistic about the suburban Maryland market for a wide range of new dwellings.

Turner, the veteran builder whose firms have built nearly 15,000 houses in this area in the past 30 years, said this week that MCD Holdings Inc. (of which he is chairman) expects to finish 350 houses this year and 609 in 1979.

"We now are developing or building at nine different area locations," added Pearce, who was recently elevated to president of MCD after a long tenure as Turner's right-hand man and executive vice president. Turner associate Herndon G. Kilby is vice chairman and secretary of the firm, which has been publicly held since 1973.

The MCD housing line ranges from moderately priced town houses to expensive single dwellings on sites in Prince George's and Anne Bridge into Kent County, where MCD's newest development includes 360 large home sites. They're in Prospect Plantation on Kent Island, near Grasonville, where the total cost of a house and lot could range from $120,000 to $200,000.

Until recent years most of the Turner-built houses were in the lower price ranges. Now even town houses begin around $50,000.

"I was over at Kettering (one of MCD's large communities of single houses, town houses and apartments) last weekend for a party by residents," said Turner. "One of the owners grabbed my arm and pointed to his house. He just said '$29,500' and smiled. He was one of the early buyers whose equity has been increased by appreciation or inflation, whatever you want to call it."

Both Turner and Pearce credit the recent lifting of the sewer moratorium in Maryland as the reason for MCD's plans to develop more of the land it has held for years.

"We will be able to increase total production considerably next year because of the availability of sewer and water," said Pearce, who also had a leading role in an effort by a group of Maryland builder-developers to get additional, privately financed sewage treatment facilities built in Montgomery County.

As a result, MCD subsidiary building affiliates will be building new houses on a residue of 48 lots in the Olney Mill subdivision west of Olney and will begin work on a 450-lot tract for single houses in Cherrywood, just south and west of Olney. Other MCD building sites are at Kettering, a group of lots in the Davidsonville area this side of Annapolis, town houses in the Ozon Hill area, single houses on two site along Enterprise Road in Prince George's and town houses in Howard County.

"If we can build them, I think we can sell them," commented Turner. But he has some reservations about mortgage financing. "We'll need permanent financing for the home buyers. Everyone knows that the Maryland usury ceiling is 10 per cent and that many mortgage loans now are running higher. But we try to remain confident either than money will become available within the limit or that Maryland will raise the ceiling."

Meanwhile, Pearce said he has been investigating the possibility of providing FHA financing. (The FHA-VA rate now is 9 1/2 percent.) MCD building enterprises currently are offering VA financing. He said: "Our preliminary look at FHA financing indicates there could be lots of red tape and some delays but the graduated payment mortgage does have appeal for young buyers."

Mention of young buyers stimulated Turner to point out that a recent survey made of the firm's sales of new houses showed that 80 percent of the purchasers represented two-income households. "It's the only way young people can afford to buy houses at today's prices and they certainly are interested in buying because of confidence in investing in a house. You don't have to sell them on that anymore."

Turner and Pearce estimated that their house prices have been advanced about 10 percent in the past year. They attributed the increases to the higher costs of doing business, citing country, state and federal regulations that cost money to the developer. They also stipulated steep increases in the costs of lumber, bricks and brick-laying and gypsum wallboard and drywall installation.

"Once a house is well under construction for a buyer who has a firm price, we have to absorb price increases," said Turner."You ask if home builders are fighting inflation. We're always living with it and doing our best to hold down the cost of the final product. But we also have to live with suppliers of materials and subcontractors whose services we need."

Pearce said that the firm's building operations are carefully monitored to make certain that not more than 25 houses are ever started ahead of sales at any one location.

"We might put in the footings and get the framed house under roof but we don't finish it until we have a buyer," he said. "Almost all home builders have learned that it's both expensive and economically hazardous to build up an inventory of unsold houses."

In addition to widening market breadth by developing expensive single houses on large lots across the bay at Prospect Plantation, MCD also is considering the development of condominium apartments in Prince George's and a range of new dwellings in Charles County.

What about solar heating? "We are giving it a hard look," said Pearce. "It takes expertise to do it and we want to be sure that it will be worthwhile economically to buyers when we offer it."

"Right now," he added, "we're giving some thought to going to poured concrete walls. They're more expensive but a shortage of masons who lay the cement block walls is certainly a problem.Nor have we moved into panelized construction as have many other others. We're still stick-by-stick builders doing on-site construction. But we're keeping our options open."

In addition to Turner, Pearce and Kilby, the MCD executive team includes Clinton W. Scaggs Jr., director and treasurer, Thomas W. Hayes, director and vice president, Asa W. Gray, director and vice president, and E. Chandlee Archer and Wilbert N. Sales, directors.

In addition to its home building operations in this area, MCD also has developed the large Bahia Mar hotel and yachting center on the Inland Waterway at Fort Lauderdale, Fla.

Turner and members of his family and business associates also have developed other hotel and motel properties and rental apartments over the years.

Turner, who lives on an estate near the firm's Enterprise Road area development, worked as a roffer before he went into the military and served as a Seabee in World War II. He started his own building business after the war and built thousands of moderately priced houses in Carrollton, New Carrollton, Calverton and Kettering.

Over the years he never feared competition. When Levitt opened with a big fanfare and heavy opening sales at Belair at Bowie in the early 1960s, other area builders feared that the nationally known Levitt would drain their markets.

But Turner kept his cool and found that his offerings in Prince George's County were viable alternatives for the thousands who shoped Levitt houses. He now feels the same way about new developments scheduled in the Largo area, where his Kettering community has been under way for 11 years.

"Competition is good for everyone and builders are no exception," said Turner, who has been around long enough to know most of the problems of the home building business.