What Are the Biggest Challenges Facing Today's Home Builders?

The housing industry has overcome a number of challenges in 2025, and some are expected to persist throughout the remainder of 2026 as well. The National Association of Home Builders/Wells Fargo Housing Market Index survey assessed builders’ greatest concerns for the year ahead and found that interest rates and home prices will continue to be a pain point for builders over the next year.

Interest rates continue to be the biggest challenge in 2026

The most significant challenge builders faced in 2025 was high interest rates, as reported by 84% of survey respondents. In 2026, 65% of builders say that interest rates will continue to be a challenge.

However, a bigger challenge this year, according to the survey, is the number of would-be homebuyers holding out in hopes of interest rates or home prices declining. Of those surveyed, 74% of builders anticipate this will be a major challenge in 2026.

Cost concerns have grown dramatically over the years. In 2011, just 5% of builders believed high interest rates were a major problem, and by 2020, when interest rates reached record lows, that figure dropped to only 1% of builders. However, in 2022, that share grew to 66% before reaching 91% in 2024 and then tapering off slightly.

What other challenges are expected in 2026?

Economic concerns are also high on the list. In 2025, 65% of builders cited economic and job insecurity as a top concern, and 61% of builders expect this trend to continue in 2026. Additionally, 63% of builders reported the cost and scarcity of developable lots as a major concern in 2025, with 62% citing the same in 2026.

Other top concerns include negative media reports making buyers more cautious, labor scarcity, rising inflation, local and state zoning and regulations creating roadblocks, and more.