Builder Sentiment Up Slightly
US Home-Builder Sentiment Rises Slightly in August Amid High Costs and Mortgage Rates
Key Points
Current single-family home sales subindex rose to 39 in August, the highest level since May, while gauges of future sales and prospective buyer traffic remained unchanged.
The 30-year fixed mortgage rate declined in the week ended August 7 to 6.77%, marking the first drop since mid-June but still near the year’s high.
About 35% of builders cut prices in August to support demand, a level described as down slightly from July in one report.
Sixty-three percent of builders used sales incentives in August, a share essentially unchanged from the prior month.
Custom home builders continued to report stronger market conditions than spec builders, and smaller, less dense markets outperformed larger metropolitan areas.
US home builder confidence nudged up by one point in August, but the housing market remains deeply troubled. The NAHB/Wells Fargo Housing Market Index rose to 35 from 34, according to Kitco, marking its 16th straight month below the key threshold of 50 — the level that signals positive conditions.
High mortgage rates, rising construction costs, and broad economic uncertainty continue to hold builders back. The 30-year fixed mortgage rate stood at 6.77% in the week ended August 7, according to Investing.com — still near its yearly high, even after dipping for the first time since mid-June.
Current Sales Inch Up While Buyers Stay on Sidelines
Inside the index, the current single-family sales subindex rose to 39 in August — its highest level since May, according to Freedom 96.9. That is a small bright spot. But the gauges tracking future sales expectations and prospective buyer traffic held flat. Buyers are watching but not committing.
NAHB Chairman Bill Owens pointed to cost pressures as a key reason buyers are hesitant. Gas and diesel price increases are pushing up material costs. That squeezes builders from both sides: costs go up while demand stays weak. Owens noted that many buyers simply are not ready to jump into the market.
Builders Slash Prices and Pile on Incentives to Lure Buyers
About 35% of builders cut home prices in August to attract buyers, according to Kitco. That share is down slightly from July, but it shows how much pressure builders face. Price cuts are now a routine tool, not a last resort.
Incentives are even more widespread. Sixty-three percent of builders used sales incentives in August — things like mortgage rate buydowns, free upgrades, or closing cost help. That share was essentially unchanged from the prior month, according to Freedom 96.9. Builders are doing what it takes to move homes, but the overall market remains fragile.
Smaller Markets and Custom Builders Outpace Big-City Peers
Not every corner of the market looks the same. Custom home builders reported stronger conditions than spec builders — those who build homes before finding a buyer, according to Woodworking Network. Spec builders carry more risk and are feeling it more acutely right now.
Geography matters too. Smaller, less dense markets are holding up better than large metropolitan areas. Regional results showed improvement in the Northeast, South, and West. These pockets of relative strength suggest some buyers remain active — just not in the biggest, most expensive cities.
War-Linked Cost Pressures Add Another Layer of Pain
Beyond mortgage rates, builders face a separate cost challenge. According to Investing.com, building costs have been pushed higher by the US-led conflict, which has disrupted supply chains and lifted energy prices. Diesel and gas price spikes flow directly into the cost of hauling materials and running job sites.
Those compounding pressures — high rates, rising energy costs, and economic uncertainty — explain why sentiment has stayed below 40 for 16 months straight. A one-point gain is welcome, but it does not signal a turnaround. The housing market is in a holding pattern, waiting for relief that has not arrived yet.
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