Builder sentiment hits a one-year low
Confidence among US homebuilders dropped three points to 32 in September, according to the NAHB/Wells Fargo Housing Market Index, the weakest reading in a year and matching the lowest level since late 2022. The figure fell short of the median estimate of 34 in a Bloomberg survey of economists. Any reading below 50 means more builders describe conditions as poor than good, and the index has remained under that threshold for more than two years.[S1][S2]
The index tracking current sales conditions declined four points to 35, while the gauge of sales expectations for the next six months fell six points to 37. A measure of prospective buyer traffic held steady at 23. The survey has been conducted by NAHB for more than four decades and asks builders to rate current sales, future sales and buyer traffic.[S1][S2]
Rates, labor and costs squeeze builders
Bill Owens, the NAHB's chairman and a builder and remodeler based in Worthington, Ohio, reported that customer traffic has declined in many regions, driven mainly by climbing mortgage rates. He added that builders are still contending with costlier materials, higher gasoline and diesel prices, and ongoing worker shortages. According to Owens, builders in certain markets say tougher immigration enforcement is causing legal employees to stay away from construction sites.[S1][S2]
Robert Dietz, the NAHB's chief economist, stated that the index reflects the weakest builder confidence since September 2025, with restrictive lending conditions and high land, labor and construction expenses continuing. He also pointed out that 42% of builders described the current supply of lots as poor, while 38% called it fair.[S1]
Price cuts and incentives rise
In September, 38% of builders cut prices, up from 35% in August, while the average price cut stayed at 6% for the sixth consecutive month. The share of builders using sales incentives rose to 66% from 63% in August, the highest since 67% in December.[S1][S2]
On a three-month moving average, regional HMI scores showed the Midwest down one point to 44, the Northeast down five points to 39, the South down one point to 31 and the West up one point to 28. Sentiment in the South, the largest homebuilding region, slipped to its lowest in a year.[S1][S2]
Investors have been pessimistic about the sector: the iShares US Home Construction ETF is down about 20% over the year. The federal government is scheduled to release its new residential construction report for August on Thursday, and the National Association of Realtors will publish pending-home sales for August the same day.[S2]
