Builder confidence in the market for newly built single-family homes declined 2 points in August to 39, the lowest reading since December, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
NAHB attributed the decline in builder confidence to elevated interest rates and high home prices.
“Challenging housing affordability conditions remain the top concern for prospective home buyers in the current reading of the HMI, as both present sales and traffic readings showed weakness,” NAHB Chairman Carl Harris said in a statement. “The only sustainable way to effectively tame high housing costs is to implement policies that allow builders to construct more attainable, affordable housing.”
The August HMI survey showed that 33% of builders cut home prices to bolster sales in August, up from 31% in July and the highest share in 2024.
Meanwhile, the use of sales incentives hit its highest level since 2019, increasing to 64% in August from 61% in July.
The NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
Read the full HMI report here.
