Homebuilders are a little more confident in sales conditions despite economic uncertainty and elevated rates.
Homebuilders are feeling just a tad more confident as the summer housing market draws to an end.
Homebuilder confidence in current sales conditions bumped up one point, raising the National Association of Home Builders/Wells Fargo Housing Market Index to 35 on Monday. Anything under 50 reflects that more builders view the market for new homes as "poor" than "good."
The subdued mood reflects a market where elevated mortgage rates are stifling buyers' appetites and compressing builder's margins, but new-home sales remain somewhat steady.
While builder confidence based on sales expectations and prospective buyer traffic didn't budge, builders expressed slightly better views of current sales conditions.
NAHB Chairman Bill Owens says the low confidence reading reflects concerns about both high construction costs and broader economic uncertainty.
“Rising gas and diesel prices are pushing up material costs, and spec home building remains weak as many prospective buyers stay on the sidelines," Owens says. "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."
About 35% of buyers cut prices in August, from 37% in July and 35% in June. The average price reduction was 6%, and builders reported 63% use of sales incentives. Both numbers are unchanged from July.
NAHB Chief Economist Robert Dietz says that August marks the 16th month in a row that at least 30% of builders cut prices to support demand. The 0-100 index has also been below 40 for 16 months.
The sentiment comes a few days after the the U.S. Census Bureau and Department of Housing and Urban Development reported that sales of new-construction homes rose in June. The median sale price dropped to $398,000, 3.3% below May's $412,000 median price and 2.7% below what it was in June 2025.
Builders stick to the fundamentals
Builders are seeing a widely segmented market—the year has been marked by a sharp decline in home sales in the West while the Midwest and South perform somewhat better. Meanwhile, multifamily building is surging.
It's also a market where the higher end of the market continues to move along while lower-priced homes don't pencil in the same way.
"Custom home builders continue to report stronger market conditions than spec builders, reflecting better conditions at the higher end of the market," Dietz says. "Smaller, less dense markets are also outperforming larger metropolitan areas, and smaller builders report relatively stronger conditions than larger builders.”
Homebuilders continue to play it safe as the number of homes they deliver stays modest. For instance, M/I Homes Inc., an Ohio-based builder that focuses on Midwestern markets, reported a 6% decline in homes delivered in the second quarter.
But while the company is seeing average closing prices and backlog declining a bit this year, the builder says it still aims to have a solid year based on new contracts and solid margins.
"Notwithstanding current market conditions, we are confident in the long-term fundamentals of the housing industry and in our ability to navigate this uncertain environment," CEO Bob Schottenstein said in the company's July earnings report.