NAHB: Builder sentiment inches higher but still negative

Washington, D.C.—Builder confidence edged higher at the end of the year but remained firmly in negative territory as construction costs, tariff concerns and affordability pressures continued to weigh on the housing market, according to the National Association of Home Builders (NAHB).

Builder sentiment in the market for newly built single-family homes rose one point to 39 in December, according to the NAHB and Wells Fargo Housing Market Index. Confidence stayed below the breakeven level of 50 throughout 2025 and hovered in the high 30s during the fourth quarter.

“Market conditions remain challenging, with two-thirds of builders reporting they are offering incentives to move buyers off the fence,” said NAHB chairman Buddy Hughes, a home builder and developer from Lexington, N.C. “At the same time, builders are dealing with rising material and labor costs, as tariffs continue to impact construction pricing.”

Builders reported some positive signals heading into the new year. Future sales expectations remained above the breakeven mark for the third straight month, while easing monetary policy may help improve loan conditions early in 2026.

“Builders continue to face supply-side headwinds as regulatory costs and material prices remain elevated,” said NAHB chief economist Robert Dietz. “Rising inventory has also increased competition for newly built homes.”

The December survey showed 40% of builders cut prices, marking the second consecutive month that share reached 40% or higher since May 2020. Price reductions averaged 5% in December, down from 6% in November. Sales incentives rose to 67%, the highest level recorded since the pandemic.

The NAHB has conducted the Housing Market Index survey for more than 40 years. The index measures builder views on current sales, future sales expectations and buyer traffic. Readings above 50 indicate more builders rate conditions as good rather than poor.

The index measuring current sales conditions increased one point to 42. The future sales index rose one point to 52. Buyer traffic remained unchanged at 26.

Regional three-month moving averages showed mixed results. The Northeast fell one point to 47. The Midwest rose two points to 43. The South increased two points to 36. The West gained four points to 34.

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