Builder Sentiment Remains Negative, NAHB/Wells Fargo Housing Market Index Finds
Market uncertainty exacerbated by the government shutdown along with economic uncertainty stemming from tariffs and rising construction costs kept builder confidence firmly in negative territory in November.
Builder confidence in the market for newly built single-family homes rose one point to 38 in November, according to the National Association of Home Builders/Wells Fargo Housing Market Index. Any reading under 50 indicates that more builders view conditions as poor than good.
“While lower mortgage rates are a positive development for affordability conditions, many buyers remain hesitant because of the recent record-long government shutdown and concerns over job security and inflation,” said NAHB Chairman Buddy Hughes, a home builder and developer from Lexington, N.C. “More builders are using incentives to get deals closed, including lowering prices, but many potential buyers still remain on the fence.”
In a further sign of ongoing challenges for the housing market, the latest Housing Market Index survey revealed that 41% of builders reported cutting prices in November, a record high in the post-Covid period and the first time this measure has passed 40%. The average price reduction was 6% in November, the same rate as the previous month. The use of sales incentives was 65% in November, equal to the share in September and October.
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.” The index gauging current sales conditions increased two points to 41, the index measuring future sales fell three points to 51 and the gauge charting traffic of prospective buyers posted a one-point gain to 26.
Looking at the three-month moving averages for regional HMI scores, the Northeast rose two points to 48, the Midwest fell one point to 41, the South increased three points to 34 and the West gained two points to 30.
