Builder Confidence Slips Again in August Housing Market

Builder confidence in the single-family housing market fell to 32 in August, marking 16 straight months of negative sentiment.
High mortgage rates and affordability concerns remain the main hurdles, leading many builders to cut prices or offer incentives.
Regional results were mixed, but overall data shows that affordability and Federal Reserve policy will shape builder outlook in the months ahead.

Key Takeaways

Confidence Stuck in Neutral

Builder sentiment dropped one point to 32 in August, according to the NAHB/Wells Fargo Housing Market Index. The index has stayed between 32 and 34 since May, showing little movement in either direction.

“Affordability continues to be the top challenge for the housing market, and buyers are waiting for mortgage rates to drop before moving forward,” said NAHB Chairman Buddy Hughes, a builder and developer from North Carolina.

Market Pressures Hold Firm

Regulatory burdens and high development costs continue to strain builders. NAHB Chief Economist Robert Dietz urged the Federal Reserve to cut rates, saying lower borrowing costs would help both construction financing and homebuyer affordability.

Builders are also leaning on discounts and promotions. In August, 37% cut prices, with an average drop of 5%—the same trend since last November. At the same time, 66% used sales incentives, the highest share since the pandemic recovery period.

Index Components and Regional Trends

Current sales conditions: down one point to 35
Sales expectations (next six months): steady at 43
Buyer traffic: up two points to 22, though still weak

On a three-month average, the Northeast slipped to 44, the Midwest rose to 42, the South fell to 29, and the West dropped to 24.

Why It Matters

With sentiment stuck in negative territory, the housing market faces a tough mix of high mortgage rates and persistent costs. Builders remain cautious about new projects, and buyer activity is unlikely to improve until financing becomes more affordable.