Builder Confidence Rises in October

Builder sentiment levels increased in October as future sales expectations exceeded the 50-point mark for the first time since January 2024, according to the National Association of Home Builders (NAHB).

Builder confidence in the market for newly built single-family homes was 37 in October, up five points from September and the highest reading since April, according to the NAHB/Wells Fargo Housing Market Index (HMI).

“While recent declines for mortgage rates are an encouraging sign for affordability conditions, the market remains challenging,” says NAHB chairman Buddy Hughes, a homebuilder and developer from Lexington, North Carolina. “The housing market has some areas with firm demand, including smaller builders shifting to remodeling and ongoing solid conditions for the luxury market. However, most homebuyers are still on the sidelines, waiting for mortgage rates to move lower.”

The HMI survey also revealed that 38% of builders reported cutting prices in October. The average price reduction rose to 6% in October, up from a 5% average for several months. The use of sales incentives was 65% in October, the same as in September.

“The HMI gain in October is a positive signal for 2026 as our forecast is for single-family housing starts to gain ground next year,” said NAHB Chief Economist Robert Dietz. “The 30-year fixed-rate mortgage fell from just above 6.5% at the start of September to 6.3% in early October. Combined with anticipated further easing by the Fed, builders expect a slightly improving sales environment, albeit one in which persistent supply-side cost factors remain a challenge.”

The NAHB/Wells Fargo HMI measures 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 the 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.

In October, the component measuring current sales conditions increased to 38, the index measuring future sales increased nine points to 54 and the index measuring traffic of prospective buyers posted a four-point gain to 25.