Builder sentiment remains muted from economic and geopolitical uncertainty, elevated mortgage rates and rising construction costs, with the latest data and analysis from homebuilders painting an overall still-muddled picture of near-term housing demand and affordability.
Builder confidence in the market for newly built single-family homes inched up one point to 35 in August, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released Aug. 17.
“While builder sentiment edged higher in August, builders continue to contend with high construction costs and broader economic uncertainty,” said NAHB Chairman Bill Owens, a homebuilder and remodeler from Worthington, Ohio. “Rising gas and diesel prices are pushing up material costs, and spec home building remains weak as many prospective buyers stay on the sidelines. However, the Midwest remains a bright spot for the home building industry, with new home sales up in that region more than 2% so far in 2026.”
Indeed, three major homebuilders—D.R. Horton, Lennar Corp and PulteGroup—recently ended their earnings calls over the last few weeks with optimistic yet guarded sentiments, as the real estate industry more broadly seeks to parse out an overall slow summer and continued geopolitical uncertainty.
“Our latest builder survey continues to show signs of weakness in the home building market,” said NAHB Chief Economist Robert Dietz. “August marked the 16th straight month that at least 30% of builders reported cutting prices to support demand, as well as the 16th consecutive month with the HMI below 40. Custom home builders continue to report stronger market conditions than spec builders, reflecting better conditions at the higher end of the market. Smaller, less dense markets are also outperforming larger metropolitan areas, and smaller builders report relatively stronger conditions than larger builders.”
The latest HMI survey also revealed that 35% of builders cut prices in August, down from 37% in July, and unchanged from June (35%). The average price reduction was 6% in August, the same rate as the previous month. The use of sales incentives was 63% in August, unchanged from the previous month.
Derived from a monthly survey that NAHB has been conducting for more than 40 years, 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.
The index measuring current sales conditions increased two points to 39, while the indexes for future sales expectations and prospective buyer traffic held steady at 43 and 23, respectively.
Looking at the three-month moving averages for regional HMI scores, the Northeast fell one point to 44, the Midwest held steady at 45, the South fell two points to 31 and the West was unchanged at 27.
