Hardware Retailing The Industry's Source for Insights and Information
Builder confidence inched higher to end the year but remains well into negative territory as builders continue to grapple with rising construction costs, tariffs and economic uncertainty, and as many potential buyers remain on the sidelines due to affordability concerns.
Builder confidence in the market for newly built single-family homes rose one point to 39 in December, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).
Sentiment levels were below the breakeven point of 50 every month in 2025 and ranged in the high 30s in the final quarter of the year.
Market conditions remain challenging, with two-thirds of builders reporting they are offering incentives to move buyers off the fence.
Builders report that future sales expectations have been above the key breakeven level of 50 for the past three months and the recent easing of monetary policy should help builder loan conditions at the start of 2026. However, builders continue to face supply-side headwinds, as regulatory costs and material prices remain high. Rising inventory has also increased competition for newly built homes.
The latest HMI survey also revealed that 40% of builders reported cutting prices in December, marking the second consecutive month the share has been at 40% or higher since May 2020.
The HMI index gauging current sales conditions increased one point to 42, the index measuring future sales rose one point to 52 and the gauge charting traffic of prospective buyers held steady at 26.
