Builder Confidence Inches Up Ahead of New Year

Home builder confidence is ending the year on a slightly higher note, with the National Association of Home Builders/Wells Fargo Housing Market Index rising one point to 39 in December. While the index shows a slight improvement in sentiment from the prior month, the index was still below the midpoint of 50 (neutral sentiment), as it has been every month in 2025.

Builders are continuing to face headwinds, but some are reporting improved conditions

The survey also has builders rate their confidence levels on individual metrics, such as single-family home sales, expected sales over the next six months, and the current level of buyer traffic they're seeing. These responses are then combined into a seasonally adjusted index where scores above 50 (to 100) mean more builders see conditions as good rather than poor.

In December, confidence in current sales rose slightly to 42, while expectations for future sales increased to 52. Buyer traffic, meanwhile, remained unchanged from the prior month at 26, bringing down the overall sentiment.

Price cuts and incentives continue to be the norm

As the outlook remains low, builders are pushing incentives to drive traffic and make sales; in fact, two-thirds of builders reported the use of incentives to sell homes. Additionally, 40% of builders report cutting prices in December, but that figure is down slightly from the 41% of builders who said the same in November. The average price reduction was 5% in December, compared with 6% in November.