High costs, mortgage rates spark fall in builder confidence

Builder confidence in the market for single-family homes fell this month amid rising material expenses, elevated land costs and high mortgage rates, according to the National Association of Home Builders..Released July 16, the NAHB/Wells Fargo Housing Market Index dropped two points to 34. Sentiment has been under 40 for 15 straight months, the longest such stretch in 14 years. The index tracking current sales conditions fell one point to 37, while the future sales index dropped two points to 43. The index tracking the traffic of prospective buyers dropped two points to 23. Any reading lower than 50 shows a majority of builders do not feel confident about their current and near-term housing outlook. Thirty-seven percent of builders cut prices this month, up from 35 percent in June and 32 percent in May. The average price reduction was 6 percent, unchanged from June. “Many potential buyers remain on the sidelines as they wait for lower mortgage rates, more certainty on inflation and a clearer economic outlook,” said NAHB Chair Bill Owens.NAHB Chief Economist Robert Dietz said the 21st Century ROAD to Housing Act is positive for the industry but will take time to make an impact. The law streamlines environmental reviews and provides grants to local and state governments that pass new zoning and land-use policies to spark construction. The law bans large institutional investors from acquiring single-family homes. New residential construction was lackluster last month, according to the U.S. Census Bureau and U.S. Department of Housing and Urban Development. Privately-owned housing units authorized by building permits dropped 3.0 percent to 1.36 million from 1.41 million in June. Single-family authorizations fell 2.4 percent to 871,000 from 892,000. Privately-owned housing starts increased 19 percent to 1.42 million from 1.19 million in May, 3.5 percent higher than the June 2025 rate of 1.37 million. Single-family housing authorizations dropped 2.4 percent from May to 871,000. Privately-owned housing completions increased 3.3 percent to 1.39 million from 1.34 million in May. Single-family housing completions increased 6.6 percent to 964,000 from 904,000 in May.