Home Builder Confidence Inches Up to 35, Below 40

Builder sentiment improved slightly in August. The National Association of Home Builders/Wells Fargo (WFC) Housing Market Index rose one point to 35, marking the 16th consecutive month the reading has stayed below 40. Builders continue to wrestle with high mortgage rates and rising construction costs, with demand for spec homes still weak.

Current sales conditions climbed two points to 39. Sales expectations over the next six months held at 43, unchanged from July. Traffic of prospective buyers also stayed flat at 23, suggesting buyer activity has not picked up despite the modest gain in headline sentiment.

“While builder sentiment edged higher in August, builders continue to contend with high construction costs and broader economic uncertainty,” NAHB Chairman Bill Owens said. Owens pointed to rising gas and diesel prices as a new factor pushing material costs higher. He highlighted the Midwest as a relative bright spot, with new home sales in the region up more than 2% so far in 2026.

NAHB Chief Economist Robert Dietz said the survey continues to show weakness in the home building market. Custom home builders are reporting stronger conditions than spec builders, Dietz said, while smaller markets and smaller builders are also outperforming their larger counterparts.

Incentives are still widespread but easing. In August, 35% of builders cut prices, down from 37% in July and matching the June level. The average price reduction stayed at 6%. The share of builders using sales incentives remained at 63%.

Regional three-month moving averages were mixed. The Northeast slipped one point to 44. The Midwest held at 45. By contrast, the South dropped two points to 31, and the West was unchanged at 27.

Wells Fargo, co-sponsor of the index, carries an AlphaScala score of 56, a moderate rating.