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Builder Sentiment Stays Weak as Affordability Concerns Persist – Eye On Housing

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Economic uncertainty and persistent affordability challenges driven by rising material prices, high land costs, and elevated mortgage rates continue to weigh on builder sentiment.

Builder confidence in the market for newly built single-family homes fell two points to 34 in July, down from an upwardly revised reading of 36 in June, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). Sentiment has remained below 40 for 15 consecutive months, the longest such stretch since 2012.

With the HMI below 40 for 15 straight months, affordability remains the home building industry’s primary challenge, as elevated mortgage rates, costly land, rising material prices, and persistent skilled labor shortages continue to affect the market. Looking ahead, the newly enacted 21st Century ROAD to Housing Act is a positive step that will help expand housing supply and lower overall housing costs, although more policy change is needed at the state and local level.

The latest HMI survey also revealed that 37% of builders cut prices in July, up from 35% in June and 32% in May. The average price reduction was 6% in July, the same rate as the previous month. The use of sales incentives was 63% in July, up slightly from 62% in June, and marking the 16th consecutive month this share has reached 60% or higher.

Derived from a monthly survey that NAHB has been conducting for more than 40 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All of the HMI sub-indices posted declines in July. The HMI index gauging current sales conditions fell one point to 37, the index measuring future sales dropped two points to 43 and the index charting traffic of prospective buyers posted a two-point decline to 23.

Looking at the three-month moving averages for regional HMI scores, the Northeast rose one point to 45, the Midwest increased two points to 45, the South fell one point to 33 and the West dropped one point to 26. The HMI tables can be found at nahb.org/hmi.



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Affordability Concerns Push New Home Sales Lower in May – Eye On Housing

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Elevated mortgage rates, rising inflation and economic uncertainty kept many buyers out of the market in May as consumers and builders continue to deal with challenging affordability conditions. While monthly sales activity softened, builders continue to operate in a market characterized by cautious buyers and persistent financing constraints.

Sales of newly built single-family homes fell 7.3% month-over-month in May to a seasonally adjusted annual rate of 580,000 units, according to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. This represented a 6.8% decline compared to a year earlier. A new home sale is recorded when a contract is signed, or a deposit is accepted, regardless of the stage of construction. The seasonally adjusted annual rate reflects the pace of sales that would occur over a 12-month period if current conditions persist.

New single-family home inventory totaled 496,000 units in May, up 2.3% from the prior month but down 1.4% from a year earlier. At the current sales pace, the months’ supply of new homes stood at an elevated 10.3 months, above the 9.7 months recorded one year ago. A five to six-months inventory level is generally considered to indicate a balanced market.      

Combined new and existing home inventory has edged higher in recent months, with the total months’ supply reaching 5.2 months. Inventory conditions in the existing home market have gradually improved in recent months. Moderating prices across both markets have helped support buyer demand amid ongoing affordability concerns.

At the end of May, there were 115,000 completed, ready-to-occupy homes available for sale on a non-seasonally adjusted basis, unchanged from a year earlier. Completed homes accounted for one-quarter of total inventory, while homes under construction made up 53%. The remaining 24% of homes sold in May had not yet started construction at the time the sales contract was signed.

Home prices remained relatively stable despite the slowdown in sales activity. The median new home sale price was $424,900, up 2.0% from April and essentially unchanged from a year ago. Homes priced between $300,000 and $499,999 accounted for half of all new home sales, while only 15% of sales were priced below $300,000, underscoring ongoing affordability challenges for entry-level buyers. The remaining 35% of the homes were priced above $500,000.

Regional performance was mixed in May. The Midwest posted the strongest monthly gain in sales, rising 16.2% from April, while the Northeast recorded a modest 3.0% increase. In contrast, sales declined in both the South and West, with the West experiencing the sharpest drop, falling 26.9% from the previous month.

Compared with May 2025, the Northeast was the only region to record a year-over-year gain, with sales increasing 17.2%. Sales declined 3.7% in the Midwest, 5.4% in the South, and 17.0% in the West.

On a year-to-date basis, regional trends were similarly uneven. New home sales increased 4.2% in the Midwest and 1.9% in the Northeast compared with the same period last year. Meanwhile, sales were down 8.2% in the South and 11.4% in the West, indicating that housing market weakness remains concentrated in the nation’s largest home building regions.



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Builder Sentiment Remains Weak Amid Affordability Concerns – Eye On Housing

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Builder sentiment remains subdued as rising material costs, elevated mortgage rates and ongoing affordability challenges continue to strain the housing market.

Builder confidence in the market for newly built single-family homes fell two points to 35 in June, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). This is the 14th straight month that sentiment has remained below 40, a streak not seen since 2011-2012 during the foreclosure crisis.

Costly and inefficient regulatory policy is clearly impeding the ability of builders to increase the housing supply. According to a new NAHB study, government regulation, taxes, fees and other costs add more than 26% to the price of an average single-family home. Easing permitting bottlenecks, density limits and inefficient zoning rules would help reduce costs and support the housing growth the nation needs.

The latest HMI survey also revealed that 35% of builders cut prices in June, up from 32% in May. The average price reduction was 6% in June, the same rate as the previous month. The use of sales incentives was 62% in June, up slightly from 61% in May, and marking the 15th consecutive month this share has reached 60% or higher.

Derived from a monthly survey that NAHB has been conducting for more than 40 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

The HMI index gauging current sales conditions fell two points to 38 in June, the index measuring future sales held steady at 45 and the index charting traffic of prospective buyers remained unchanged at 25.

Looking at the three-month moving averages for regional HMI scores, the Northeast rose two points to 44, the Midwest held constant at 43, the South fell two points to 33 and the West dropped one point to 27. The HMI tables can be found at nahb.org/hmi.

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This article was originally published by a eyeonhousing.org . Read the Original article here. .

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New Home Sales Down in April on Affordability Concerns – Eye On Housing

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Elevated mortgage rates, higher inflation and economic uncertainty kept more buyers on the sidelines in April as ongoing affordability challenges continue.

Sales of newly built single-family homes fell 6.2% in April to a seasonally adjusted annual rate of 622,000, according to data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The pace of new home sales is down 11.3% from a year earlier.

Mortgage interest rates increased from a monthly average of 6.18% in March to 6.33% in April per Freddie Mac, dampening homebuyer demand. Rates moved higher again in May to just above 6.4% as oil prices and short-term inflation expectations increased.

New home sales are on track to decline in 2026 as mortgage rates are expected to remain elevated in the months ahead. The Midwest remains a bright spot, with sales up 7.3% year to date, compared with declines in the rest of the country. The Midwest benefits from relative advantages for homebuyer affordability.

A new home sale occurs when a sales contract is signed, or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the April reading of 622,000 units is the number of homes that would sell if this pace continued for the next 12 months.

New single-family home inventory in April rose to 489,000 units, up 1.7% compared to the previous month. This represents an elevated 9.4 months’ supply at the current building pace. Completed, ready-to-occupy inventory accounted for 122,000 homes in April, up 6.1% from a year ago but down from the cyclical peak of 128,000 in January.

The median new home sale price was $422,500, up 8.0% from March and up 2.2% from a year ago.

Regionally, on a year-to-date basis, new home sales are up 7.3% in the Midwest. New home sales are down 9.7% in the Northeast, 7.6% in the South and 9.5% in the West.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

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Single-Family Starts Fall Amid Economic Uncertainty and Affordability Pressures – Eye On

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Single-family housing starts declined in April as builders faced continued economic uncertainty and affordability challenges, including higher construction costs, ongoing labor shortages and elevated financing expenses. The latest housing starts and permits data suggest that the overall construction pipeline remains uneven across regions and property types.

Overall housing starts decreased 2.8% in April to a seasonally adjusted annual rate of 1.47 million units, according to a report from the U.S. Department of Housing and Urban Development (HUD) and the U.S. Census Bureau. This pace reflects the number of housing units builders would begin over the next 12 months if April’s activity were sustained.

Within the total, single-family starts decreased 9.0% to a 930,000 seasonally adjusted annual rate and were down 2.4% compared to April 2025. On a year-to-date basis, single-family starts are down 5.1%. Given recent volatility, the three-month moving average provides a clearer signal, rising to 958,000 units.

Multifamily starts, which include apartment buildings and condominiums, increased 10.3% from March to April to an annualized 535,000 pace. The three-month moving average for multifamily construction has trended higher to 481,000 units, and activity is 19.7% higher compared to year-earlier levels.

Regionally, on a year-to-date basis, combined single-family and multifamily starts were 16.6% higher in the Northeast, 1.8% higher in the South, 0.4% lower in the West, and 2.9% lower in the Midwest. For single-family starts, the Midwest was the only region to post an increase, rising 5.2% and reflecting the residential construction strength in the region.

The total number of housing units under construction stood at 1.3 million in April, down 8.5% from a year earlier. Single-family homes under construction stood at 588,000 units, a 7.0% year-over-year decline. Multifamily units under construction declined to 687,000, down from peaks above 1 million units in December 2023 and 9.8% lower than a year ago.

Completions of single-family homes have slowed to an annual rate of about 903,000 units, reflecting ongoing challenges in the residential construction sector. This marks a 7.0% decline from a year earlier. However, multifamily completions for buildings with five or more units were up 6.4% year over year to a 529,000-unit pace. On a year-to-date basis, total completions across both sectors are down 11.2%.

Overall permits increased 5.8% to a 1.44-million-unit annualized rate in April. Single-family permits decreased 2.6% to an 872,000-unit rate and are down 5.5% compared to April 2025. Multifamily permits increased 21.8% to an annualized 570,000 pace and are up 9.2% compared to April 2025. Looking at regional permit data on a year-to-date basis, total permits were 14.2% higher in the Northeast, 7.3% higher in the Midwest, 0.7% higher in the West, but 6.7% lower in the South.



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Housing Affordability Edges Up in First Quarter but Challenges Persist – Eye On Housing

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While housing affordability remains out of reach for millions of Americans, particularly first-time and entry-level buyers, conditions have improved modestly in the last year, according to the latest data from the National Association of Home Builders (NAHB)/Wells Fargo Cost of Housing Index (CHI). The CHI results from the first quarter of 2026 show that a family earning the nation’s median income of $106,800 needed 32% of its income to cover the mortgage payment on a median-priced new home. Low-income families, defined as those earning only 50% of median income, would have to spend 65% of their earnings to pay for the same new home.

In the last year, the income share needed to buy a new home declined from 36% in the second quarter of 2025, to 35% in the third quarter, 34% in the fourth quarter, and to 32% in the first quarter of 2026. Although home buyers continue to grapple with elevated mortgage rates and economic uncertainty, these figures indicate a modest improvement in affordability.

The same trend holds true for existing homes. A typical family would have had to pay 37% of their income for a median-priced existing home in the second quarter of 2025, 36% in the third quarter, 34% in the fourth quarter, and 32% in the first quarter of 2026. A low-income family would have needed to pay 65% of their earnings to make the same mortgage payment on an existing home in the first three months of 2026.

The U.S. data for the percentage of earnings needed to purchase a new home in the first quarter is based on a national median new home price of $403,200 and median income of $106,800. The first quarter median new home price is down slightly from $405,300 in the fourth quarter of 2025. Meanwhile, the corresponding price for an existing home fell more sharply in the first quarter to $404,300 from $414,900 in the previous quarter. The average 30-year mortgage rate edged slightly lower from 6.32% in the fourth quarter to 6.20% in the first quarter.

CHI is also available for 175 metropolitan areas, calculating the percentage of a family’s income needed to make the mortgage payment on an existing home based on the local median home price and median income in those markets.

In seven out of 175 markets in the first quarter, the typical family is severely cost-burdened (must pay more than 50% of their income on a median-priced existing home). In 59 other markets, such families are cost-burdened (need to pay between 31% and 50%). There are 109 markets where the CHI is 30% of earnings or lower.

The Top 5 Severely Cost-Burdened Markets

San Jose-Sunnyvale-Santa Clara, Calif., was the most severely cost-burdened market in the CHI, where 79% of a typical family’s income is needed to make a mortgage payment on an existing home. This was followed by:

Urban Honolulu, Hawaii (68%)

San Diego-Chula Vista-Carlsbad, Calif. (65%)

San Francisco-Oakland-Fremont, Calif. (63%)

Naples-Marco Island, Fla. (58%)

Low-income families would have to pay between 115% and 158% of their income in all five of the above markets to cover a mortgage.

The Top 5 Least Cost-Burdened Markets

By contrast, Decatur, Ill., was the least cost-burdened markets on the CHI, where typical families needed to spend just 12% of their income to pay for a mortgage on an existing home. Rounding out the least burdened markets are:

Peoria, Ill. (15%)

Elmira, N.Y. (16%)

Springfield, Ill. (17%)

Davenport-Moline-Rock Island, Iowa-Ill. (18%)

Low-income families in these markets would have to pay between 25% and 37% of their income to cover the mortgage payment for a median-priced existing home.

Visit nahb.org/chi for tables and details.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

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Builder Sentiment Posts Gain in May but Significant Affordability Challenges Persist – Eye

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Builder confidence posted a modest gain in May even as buyers grapple with rising mortgage rates and economic uncertainty while builders continue to contend with elevated land, labor and construction costs.

Builder confidence in the market for newly built single-family homes increased three points to 37 in May, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).

Recent increases for long-term interest rates will continue to hold back home buyer demand. Although some regional markets, including parts of the Midwest, are showing relative strength, the housing market continues to face significant affordability challenges.

On the policy front, efforts in the House to modify the 21st Century ROAD to Housing Act could increase the nation’s housing supply and help ease builder concerns. In particular, the revision in the House bill with respect to the harmful built-to-rent proposal is a positive development.

The latest HMI survey also revealed that 32% of builders cut prices in May, down from 36% in April. The average price reduction was 6%, up from the 5% figure in April. The use of sales incentives was 61% in May, up slightly from 60% in April, and marking the 14th consecutive month this share has reached 60% or higher.

Derived from a monthly survey that NAHB has been conducting for more than 40 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three of the major HMI indices posted gains in May, as some buyers who had been holding back decided to move forward this spring. The HMI index gauging current sales conditions rose three points to 40 from April to May, the index measuring future sales increased three points to 45 and the index charting traffic of prospective buyers posted a three-point gain to 25.

Looking at the three-month moving averages for regional HMI scores, the Midwest registered a one-point gain to 43, the Northeast rose one point to 42, the South held constant at 35 and the West fell one point to 28.

The HMI tables can be found at nahb.org/hmi.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

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Builder Sentiment Inches Higher but Affordability Concerns Persist – Eye On Housing

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Builder sentiment inched up in March even as builders continue to express affordability concerns stemming from elevated construction costs and shortages of buildable lots and labor.

Builder confidence in the market for newly built single-family homes rose one point to 38 in March, following a revised upward one-point revision in February, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). All responses to the March survey were received after the conflict with Iran started.

Affordability for buyers and builders remains a top concern. Many buyers remain on the fence waiting for lower interest rates and due to economic uncertainty.

While the Freddie Mac 30-year fixed rate mortgage averaged 6.05% in February, the lowest since August 2022, downpayment hurdles and uncertainty from the conflict with Iran and the price of oil will be headwinds going forward. The administration’s executive orders issued last week to reduce regulatory burdens associated with home building are a positive step toward increasing attainable housing supply.

The latest HMI survey also revealed that 37% of builders cut prices in March, up slightly from 36% in February. The average price reduction remained stable at 6%. The use of sales incentives was 64% in March, down one percentage point from February, and marking the 12th consecutive month this share exceeded 60%.

Derived from a monthly survey that NAHB has been conducting for more than 40 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three of the major HMI indices posted gains in March. The HMI index gauging current sales conditions increased one point to 42 from February to March, the index measuring future sales gained two points to 49 and the index charting traffic of prospective buyers posted a three-point increase to 25.

Looking at the three-month moving averages for regional HMI scores, the Northeast held steady at 44, the Midwest was unchanged at 43, the South held constant at 35 and the West fell two points to 31. The HMI tables can be found at nahb.org/hmi.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

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Single-Family Starts Remain Soft in January on Affordability Concerns – Eye On Housing

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Elevated construction costs and constrained affordability conditions led to a reduction in single-family housing starts in January.

However, led by solid multifamily production, overall housing starts increased 7.2% in January to a seasonally adjusted annual rate of 1.49 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The January reading of 1.49 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months.

Within this overall number, single-family starts decreased 2.8% to a 935,000 seasonally adjusted annual rate. Weather effects also likely depressed single-family construction in the Northeast, where single-family starts were down 33% from December 2025 and down more than 6% compared to January 2025 readings.

The multifamily sector, which includes apartment buildings and condos, increased 30% to an annualized 552,000 pace. However, this data may be revised lower in future revisions. Furthermore, prior NAHB analysis of the geography of permit data has shown recent gains for apartment construction occurring in lower density areas, such as exurbs, secondary cities and small towns.

On a regional basis compared to the previous month, combined single-family and multifamily starts were 47.4% higher in the Northeast, 10.8% lower in the Midwest, 11.4% higher in the South and 7.5% lower in the West.

Overall permits decreased 5.4% to a 1.38 million unit annualized rate in January. Single-family permits decreased 0.9% to an 873,000-unit rate, which is the weakest reading since August of last year. This is an indicator of relatively flat construction starts conditions for 2026 amid the ongoing affordability crisis. Multifamily permits decreased 12% to an annualized 503,000 pace.

Looking at regional permit data compared to the previous month, permits were 9.6% lower in the Northeast, 9% higher in the Midwest, 3.5% lower in the South and 15.7% in the West.

The number of single-family homes under construction fell back to 582,000 in January, down 8.8% year over year as the single-family home building market has slowed. Despite recent gains for apartment construction, the number of apartments under construction has fallen back to 686,000 units, a 10% decline from January 2025.

The multiyear trend of a smaller number of units under construction is consistent with builders pulling back construction given higher post-covid construction costs and affordability constraints.



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Affordability Posts Mild Gains in Second Half of 2025 but Crisis Continues – Eye On Housing

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Though new and existing homes remain largely unaffordable, the needle moved slightly in the right direction in the second half of 2025, according to the latest data from the National Association of Home Builders (NAHB)/Wells Fargo Cost of Housing Index (CHI). The CHI results from the fourth quarter of 2025 show that a family earning the nation’s median income of $104,200 needed 34% of its income to cover the mortgage payment on a median-priced new home. Low-income families, defined as those earning only 50% of median income, would have to spend 67% of their earnings to pay for the same new home.

In the last three quarters of 2025, the income share needed to buy a new home declined from 36% in the second quarter, to 35% in the third quarter and 34% in the final quarter of 2025. These figures indicate a slight improvement in affordability.

The same trend holds true for existing homes. A typical family would have to pay 37% of their income for a median-priced existing home in the second quarter, 36% in the third quarter and 34% in the final three months of 2025. A low-income family would need to pay 69% of their earnings to make the same mortgage payment on an existing home in the fourth quarter.

The U.S. data for the percentage of earnings needed to purchase a new home in the fourth quarter is based on a national median new home price of $405,300 and median income of $104,200. The fourth quarter median new home price is down 1.2% from $410,100 in the third quarter. The corresponding price for an existing home in the fourth quarter fell to $414,900, 2.8% down from $426,800 in the previous quarter. The average 30-year mortgage rate moved lower from 6.65% in the third quarter to 6.32% in the fourth quarter.

CHI is also available for 175 metropolitan areas, calculating the percentage of a family’s income needed to make the mortgage payment on an existing home based on the local median home price and median income in those markets.

In eight out of 175 markets in the fourth quarter, the typical family is severely cost-burdened (must pay more than 50% of their income on a median-priced existing home). In 69 other markets, such families are cost-burdened (need to pay between 31% and 50%). There are 98 markets where the CHI is 30% of earnings or lower.

The Top 5 Severely Cost-Burdened Markets

San Jose-Sunnyvale-Santa Clara, Calif., was the most severely cost-burdened market in the CHI, where 80% of a typical family’s income is needed to make a mortgage payment on an existing home. This was followed by:

Urban Honolulu, Hawaii (69%)

San Francisco-Oakland-Fremont, Calif. (63%)

San Diego-Chula Vista-Carlsbad, Calif. (62%)

Barnstable Town, Mass. (56%)

Miami-Fort Lauderdale-West Palm Beach, Fla. (56%)

Naples-Marco Island, Fla. (56%)

Low-income families would have to pay between 111% and 159% of their income in all seven of the above markets to cover a mortgage.

The Top 5 Least Cost-Burdened Markets

By contrast, many of the least cost-burdened markets were located in Illinois. In the top five least cost-burdened markets, typical families needed to spend just 16-18% of their income to pay for a mortgage on an existing home. These markets are:

Decatur, Ill. (16%)

Elmira, N.Y. (16%)

Springfield, Ill. (17%)

Peoria, Ill. (17%)

Davenport-Moline-Rock Island, Iowa-Ill. (18%)

Low-income families in these markets would have to pay between 32% and 36% of their income to cover the mortgage payment for a median-priced existing home.

Visit nahb.org/chi for tables and details.



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