Home Builder Confidence Improves Slightly

Confidence among home builders is improving, but most builders still report feeling cautiously optimistic as elevated interest rates and economic uncertainty continue to challenge the housing market. According to the Housing Market Index (HMI) from the National Association of Home Builders and Wells Fargo—which scores builder sentiment on a scale from 0 to 100— builder confidence for newly built single-family homes was 33 in July. The index is up one point from June. At the same time, however, builder sentiment has now been below 50 for 15 consecutive months.

The most recent July HMI survey shows that 38% of builders reduced home prices in July. That percentage is up slightly from 37% of builders surveyed in June; in May, that figure was 34%. The average price reduction in July was 5%, which has been unchanged since November. Additionally, 62% of builders report using sales incentives in July, which is unchanged from June.

Consistent with ongoing weakness for the HMI, single-family housing starts will post a decline in 2025 due to ongoing housing affordability challenges per the latest NAHB forecast. Single-family permits are down 6% on a year-to-date basis and builder traffic in the HMI is at a more than two-year low.