US Builder Confidence Plateaus at Low Level in August

NAHB/Wells Fargo Housing Market Index slips to 32; affordability and higher financing costs keep buyers on the sidelines.

U.S. homebuilder sentiment remained subdued in August, with the National Association of Home Builders (NAHB)
reporting its Housing Market Index (HMI) at 32, down one point from July and stuck in negative territory
for the 16th straight month. The HMI has hovered between 32 and 34 since May, reflecting persistent affordability challenges,
elevated borrowing costs and supply-side constraints.

NAHB Chair Buddy Hughes said affordability “continues to be the top challenge,” while Chief Economist Robert Dietz argued that lower
policy rates would help ease construction financing and support mortgage markets, according to the
association’s release.

Index Components of HMI:

  • The overall HMI score of 32 is an average of three underlying measures that track different aspects of the new-home market:
  • Current sales conditions fell to 35, a one-point decline. This indicates that builders see the market for newly built single-family homes as weak.
  • Sales expectations for the next six months held steady at 43, showing that builders are only slightly more optimistic about the near future. A reading below 50 still means most respondents see conditions as poor.

Traffic of prospective buyers edged up two points to 22, but that’s still very low. It reflects the fact that relatively few people are actively shopping for new homes, largely because of affordability pressures and mortgage rates.

Understanding HMI:

Anything below 50 signals more builders see conditions as “poor” than “good.”

All three measures are well below 50, so sentiment is negative across the board.

Incentives, Price Cuts Remain Widespread

To spur demand, 37% of builders cut prices in August (average reduction 5%), while
66% offered some form of sales incentive—up from 62% in July and the highest share seen in the post-COVID period,
NAHB said in its press statement.

Independent coverage noted the same trend toward more aggressive incentives among builders (MarketWatch).

Wider Market Context

The August reading matches the lowest sentiment since late 2022, underscoring the drag from mortgage rates that—despite easing
recently—remain elevated by historical standards, according to Reuters.

Regional three-month averages showed mixed momentum, with weakness concentrated in the South and West, NAHB reported.

NAHB Housing Market Index & Componenets (Dept 2024 to Aug 2025)

Sources