A method was developed for incorporating moderator feedback effects in two-dimensional nodal codes used for pressurized water reactor (PWR) neutronic analysis. Equations for the assembly average quality and density are developed in terms of the assembly power calculated in two dimensions. The method is validated with a Westinghouse PWR using the Electric Power Research Institute code SIMULATE-E. Results show a several percent improvement is achieved in the two-dimensional power distribution prediction compared to methods without moderator feedback.