Builder confidence in the market for newly built single-family homes dipped by one point to 36 in February, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). Any number under 50 indicates that more builders view conditions as poor rather than good.
The latest HMI survey revealed that 36% of builders cut prices in February, down from 40% in January. This marks the lowest incidence of price-cutting since last May (34%), while the average price reduction remains at 6%.
Builders’ use of sales incentives was 65% in February, unchanged from January, and marked the 11th consecutive month this share has exceeded 60%.
“Builders reduced their expectations for future sales as buyers report affordability challenges, which is contributing to declining consumer confidence for the overall economy,” said NAHB Chairman Buddy Hughes, a home builder and developer from Lexington, North Carolina. “While the majority of builders continue to deploy buyer incentives, including price cuts, many prospective buyers remain on the sidelines. Although demand for new construction has weakened, remodeling demand has remained solid given a lack of household mobility.”
The HMI index gauging current sales conditions held steady at 41 from January to February, while the index measuring future sales fell three points to 46 and the gauge charting traffic of prospective buyers dropped two points to 22.
Looking at the three-month moving averages for regional HMI scores, the Northeast fell one point to 43, the Midwest held steady at 43, the South dropped one point to 35 and the West fell two points to 33.
“Housing affordability remains an ongoing challenge at the start of 2026,” said NAHB Chief Economist Robert Dietz. “The solution for the housing market is the enactment of policies that will bend the construction cost curve and enable additional supply of attainable housing. On the positive side, easing inflation should continue to allow lower interest rates for mortgages and builder loans.”
