Amid Market Challenges, Builder Expectations Rise in October
Builder confidence showed a notable rebound in October, signaling cautious optimism for the housing market heading into 2026. According to the NAHB/Wells Fargo Housing Market Index, confidence in newly built single-family homes rose five points to 37, the highest level since April, with future sales expectations surpassing the 50-point breakeven mark for the first time since January. The boost in sentiment reflects builders’ expectations for a gradual recovery in single-family housing starts next year, helped by a modest drop in mortgage rates from 6.5% to 6.3% and the potential for further Federal Reserve rate cuts. While the market remains strained by high costs and supply-side challenges, demand remains stable in segments such as remodeling and luxury housing.
However, affordability continues to weigh heavily on the market, with many potential buyers holding out for lower mortgage rates. Nearly four in ten builders reported cutting home prices in October—an average reduction of 6%—while 65% offered sales incentives to attract buyers. Despite these headwinds, all three HMI components saw gains: current sales conditions rose to 38, future sales expectations jumped to 54 and buyer traffic increased to 25. Regional confidence also improved modestly across most areas, led by the Northeast and South. The overall uptick in builder sentiment suggests the market may be stabilizing, though the recovery remains gradual and uneven.
