Builder confidence remained in negative territory for the final month of 2025—as it did throughout the year due to continued economic and market challenges—though there’s some hope for a better year in 2026, according to the latest National Association of Home Builders’ (NAHB) data.
The December NAHB/Wells Fargo Housing Market Index (HMI) found that builder confidence rose only one point to 39, remaining in the higher 30s as it has throughout Q4, but still floundering below the 50-point breakeven mark.
NAHB Chief Economist Robert Dietz said that “builders continue to face supply-side headwinds, as regulatory costs and material prices remain stubbornly high. Rising inventory also has increased competition for newly built homes.”
Looking at the three-month moving averages for regional HMI scores, the Northeast fell one point to 47, the Midwest rose two points to 43, the South increased two points to 36 and the West gained four points to 34.
NAHB Chairman Buddy Hughes said that market conditions remain “challenging,” as “builders are contending with rising material and labor prices, as tariffs are having serious repercussions on construction costs.”
The latest HMI survey revealed that as the market continues to face challenges, 40% of builders reported cutting prices in December, marking the second consecutive month the share has been at 40% or higher since May 2020 (it was 41% in November). Meanwhile, the average price reduction was 5% in December, down from the 6% rate in November. The use of sales incentives was 67% in December, the highest percentage in the post-Covid period.
Builders have been feeling more confident as of late, however, with confidence slowly inching toward the 50-point mark. Specifically, the HMI index gauging current sales conditions increased one point to 42, and the gauge charting traffic of prospective buyers held steady at 26.
Looking ahead to 2026, NAHB found that builders are feeling hopeful, with the HMI index measuring future sales rising one point to 52 (remaining above 50 for another month).
“In positive signs for the market, builders report that future sales expectations have been above the key breakeven level of 50 for the past three months, and the recent easing of monetary policy should help builder loan conditions at the start of 2026,” said Dietz.
