Another month, another decline in builder confidence

As potential home buyers remain on the sidelines, the NAHB says more home builders cut prices.

The National Association of Home Builders (NAHB) reported that builder confidence in November declined for an 11th straight month.

The residential construction association points to increased interest rates, high building material costs, and declining affordability conditions that are pushing more home buyers to the sidelines.

And as home buyers hesitate in making a purchase, the continue to drag down builder sentiment, the NAHB said.

Builder confidence in the market for newly built single-family homes dropped five points to 33, according to the latest NAHB/Wells Fargo Housing Market Index (HMI) released today. 

This is the lowest confidence reading since June 2012, with the exception of the onset of the pandemic in the spring of 2020.

“Higher interest rates have significantly weakened demand for new homes as buyer traffic is becoming increasingly scarce,” said NAHB Chairman Jerry Konter, a home builder and developer from Savannah, Ga. “With the housing sector in a recession, the Biden administration and new Congress must turn their focus to policies that lower the cost of building and allow the nation’s home builders to expand housing production.”

The NAHB said that to bring more buyers into the marketplace, 59% of builders report using incentives, with a big increase in usage from September to November. 

In November, 25% of builders say they are paying points for buyers, up from 13% in September. Mortgage rate buy-downs rose from 19% to 27% over the same time frame. And 37% of builders cut prices in November, up from 26% in September, with an average price of reduction of 6%. This is still far below the 10%-12% price cuts seen during the Great Recession in 2008.

“Even as home prices moderate, building costs, labor and materials -- particularly for concrete -- have yet to follow,” said NAHB Chief Economist Robert Dietz. “To ease the worsening housing affordability crisis, policymakers must seek solutions that create more affordable and attainable housing. With inflation showing signs of moderating, this includes a reduction in the pace of the Federal Reserve’s rate hikes and reducing regulatory costs associated with land development and home construction.”

The HMI is derived from a monthly survey that NAHB has been conducting for more than 35 years. The index 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 HMI components posted declines in November. Current sales conditions fell six points to 39, sales expectations in the next six months declined four points to 31 and traffic of prospective buyers fell five points to 20.

Looking at the three-month moving averages for regional HMI scores, the Northeast fell six points to 41, the Midwest dropped two points to 38, the South fell seven points to 42 and the West posted a five-point decline to 29.

HMI tables can be found at

The U.S. Census Bureau and the U.S. Department of Housing and Urban Development are slated to release the Monthly New Residential Construction report on Nov. 17, featuring the latest housing starts and permit data for October.

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