Homebuilding confidence slipped to a 14-year low in October, with the NAHB/Wells Fargo Housing Market Index registering 29, the weakest reading since June 2012. The index has stayed under 40 for the past 18 months.
An index value below 50 signals that more participants view conditions as poor rather than good, and each of the three component measures fell beneath that threshold in the latest survey.
“Mortgage rates have climbed well above 7% in recent weeks, and higher gas prices and inflation have further weakened buyer traffic across much of the country,” said Bill Owens, chairman of the NAHB. “Though builders are also contending with higher costs for construction loans, building materials, and diesel, the Trump administration’s efforts to advance regulatory reform are helping to ease some of the cost pressures they face.”
Owens noted that one-third of builders reported immigration enforcement activity in their market areas during the past month, another pressure on the labor market causing construction delays and discouraging legal workers from reporting to work.
The findings echo Zonda’s monthly builder survey, where 84% of respondents noted sluggish demand and 60% said the slowdown “is causing concern.” One respondent described the current downturn as the worst since 2007.
NAHB chief economist Robert Dietz said, “Housing remains squeezed by supply-side constraints and significant affordability challenges. Demand persists, but higher mortgage rates, raised construction costs, and weaker consumer confidence are keeping more buyers on the sideline. As a result, buyer traffic has fallen to its lowest level since April 2012, excluding the pandemic’s onset in April 2020.”
Affordability pressure is evident: 43% of builders cut prices during the month, the highest share in the past six years, while 65% of builders reported using sales incentives, the 19th straight month the share has been at or above 60%.
Current-sales-conditions gauge slipped two points to 33, future-sales expectations dropped five points to 32, and the gauge of prospective buyer traffic fell five points to 18.
