US Builder Confidence Hits Highest Level in 6 Months: National Association

The average 30-year fixed-rate mortgage dropped to 6.27 percent, marking the second-lowest level so far this year.

A "For Sale" sign in front of a home in Arlington, Va., on Aug. 22, 2023. Andrew Caballero-Reynolds/AFP via Getty Images

U.S. builders are entering the fourth quarter on an optimistic note as mortgage rates decline.

An Oct. 16 report from the National Association of Home Builders (NAHB), presenting data from the NAHB/Wells Fargo housing market index (HMI), states that builder confidence in the new single-family home market registered a 37 in October—up by 5 points from September and the highest reading since April.

Future sales expectations jumped past the 50-point break-even mark for the first time since January 2024.

“While recent declines for mortgage rates are an encouraging sign for affordability conditions, the market remains challenging,” NAHB Chairman Buddy Hughes said in the report.

A home builder and developer in Lexington, North Carolina, Hughes noted that some smaller builders are now shifting to remodeling projects, while others are patiently waiting for mortgage rates to continue to move downward.

According to Freddie Mac, the average interest rate for a 30-year, fixed-rate mortgage fell to 6.27 percent as of Oct. 16, marking the second-lowest level so far this year. Rates for 15-year fixed-rate mortgages averaged 5.52 percent.

Mortgage rates have remained steady over the past few weeks, the agency stated.

“Importantly, homeowners have noticed these consistently lower rates, driving an uptick in refinance activity,” Freddie Mac reported.

Robert Dietz, chief economist for NAHB, said in his firm’s report: “The HMI gain in October is a positive signal for 2026 as our forecast is for single-family housing ... to gain ground next year.

“Combined with anticipated further easing by the Fed, builders expect a slightly improving sales environment, albeit one in which persistent supply-side cost factors remain a challenge.”

The latest HMI survey also shows that 38 percent of builders reported cutting prices on new homes this month, with the average price reduction at about 6 percent—a slight uptick over the average of 5 percent for reductions made in preceding months. October 2024 was the last time builders who dropped their prices did so by an average of 6 percent.

For more than 40 years, the NAHB/Wells Fargo HMI survey has been reporting on builder expectations for the current new single-family housing market.

Reviewing three-month averages for regional HMI scores, the Northeast took the lead with a 2 point rise to 46, while the Midwest remained unchanged at 42. The South and the West each experienced an uptick of 2 points, to 31 and 28, respectively.

Construction Coverage, a research firm offering insurance information and related services, recently reported that Idaho now leads the nation in new home construction with 21.2 new units per 1,000 existing homes, twice the national average.

North Carolina, South Carolina, Utah, and Arizona are also among those states leading the country in new construction, according to the research firm. In 2024, the national rate of new housing authorized held at 10.1 units per 1,000 existing homes.

Among the nation’s largest metropolitan regions, North Carolina’s Raleigh-Cary area ranked No. 1 in new construction with 28.8 new units per 1,000 existing homes. The Texas metros of Austin and Dallas-Fort Worth followed at 28.6 and 22.2 units, respectively.

At the other end, two California metros—Los Angeles-Long Beach-Anaheim and San Jose-Sunnyvale-Santa Clara—ranked last for new construction. Other metros in the bottom five include St. Louis; Philadelphia-Camden; the Wilmington metro encompassing portions of Pennsylvania, New Jersey, and Delaware; and Boston-Cambridge-Newton in Massachusetts and New Hampshire.

According to the Construction Coverage report, in 2024, almost 1.48 million new homes received building permit authorization—just slightly more than the pre-2008 historical average of 1.45 million units per year.