Builder confidence in the market for newly built single-family homes increased slightly in December, but overall sentiment remained negative throughout 2025. According to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), builder sentiment rose by one point to 39, which is still below the breakeven level of 50.
Throughout 2025, builder confidence stayed under 50 each month and was in the high 30s during the last quarter. Rising construction costs, ongoing tariffs, economic uncertainty, and affordability issues have kept many potential buyers from entering the market.
“Market conditions remain challenging with two-thirds of builders reporting they are offering incentives to move buyers off the fence,” said NAHB Chairman Buddy Hughes, a home builder and developer from Lexington, N.C. “Meanwhile, builders are contending with rising material and labor prices, as tariffs are having serious repercussions on construction costs.”
“In positive signs for the market, builders report that future sales expectations have been above the key breakeven level of 50 for the past three months and the recent easing of monetary policy should help builder loan conditions at the start of 2026,” said NAHB Chief Economist Robert Dietz. “However, builders continue to face supply-side headwinds, as regulatory costs and material prices remain stubbornly high. Rising inventory also has increased competition for newly built homes.”
The latest HMI survey found that 40% of builders cut prices in December—the second consecutive month this share has reached or exceeded 40% since May 2020. In November it was at 41%. The average price reduction dropped to 5% in December from a rate of 6% in November. Sales incentives were used by 67% of builders in December—the highest percentage since Covid-19 began affecting markets.
The HMI is based on a monthly survey conducted by NAHB for over four decades. It measures builder perceptions about current single-family home sales and expectations for sales over the next six months as well as prospective buyer traffic levels. A score above 50 means more builders view conditions as good rather than poor.
In December’s breakdown: current sales conditions increased one point to reach an index value of 42; future sales expectations rose one point to hit 52; while traffic from prospective buyers held steady at an index value of 26.
Regional HMI scores based on three-month moving averages showed mixed results: The Northeast fell by one point to reach an index value of 47; Midwest rose two points to reach 43; South increased two points to hit an index value of 36; West gained four points reaching an index value of 34.
Additional information about HMI tables can be accessed at nahb.org/hmi and further housing statistics are available through Housing Economics PLUS.
The NAHB noted that with no official release schedule yet available from the U.S. Census Bureau for its Survey of Construction data for next year, January’s HMI will be released on January 16 with further scheduling updates provided when possible.
