Builder Sentiment Declines
US Homebuilder Confidence Falls to 35, Marking Longest Slump Since 2011
Key Points
The June drop to 35 came in below expectations: economists had forecast 37 in a Bloomberg survey, and the “South” region saw its steepest sentiment decline since November 2023.
NAHB’s component details showed buyer traffic at 25 and prospective sales/expectations at 45 for the next six months—both reinforcing that builders see demand as weak even as near-term expectations hold up better than current conditions.
NAHB Chairman Bill Owens pointed to specific federal proposals, saying Congress should pass the “21st Century Road to Housing Act” (major housing package) and the “CONSTRUCTS Act” (construction labor shortage), and also the “Energy Choice Act” to prevent state and local bans on natural gas in new homes.
Bloomberg Intelligence analyst Drew Reading said the spring selling season has been disappointing for publicly traded homebuilders, with soft demand leaving many companies’ order backlogs “well below last year’s levels.”
Mortgage-rate pressure was quantified more precisely: the average 30-year mortgage rate was 6.52% as of June 11, up from 6.35% a month earlier, according to Freddie Mac.
U.S. homebuilder confidence slipped again in June, with the NAHB/Wells Fargo Housing Market Index falling two points to 35—missing economist forecasts of 37, according to Bloomberg. That keeps the index below 50, the dividing line between optimism and pessimism, for 14 straight months. It is the longest such streak since 2011.
The drop reflects a housing market squeezed from every direction. The average 30-year mortgage rate climbed to 6.52% as of June 11, up from 6.35% a month earlier, according to Freddie Mac. At the same time, builders say high materials costs, labor shortages, and red tape are making it nearly impossible to build affordable homes.
Builders Cut Prices and Stack on Incentives to Move Homes
Demand is so weak that builders are giving ground fast. About 35% of builders cut prices in June, up from 32% in May, with an average reduction of 6%, according to NAHB. Another 62% offered incentives—things like mortgage rate buy-downs or help with closing costs. That marks 15 straight months where more than 60% of builders felt they had to sweeten the deal.
The index's components tell the same grim story. Current sales conditions fell two points to 38. Buyer traffic held flat at just 25—far below the 50 threshold. The only relatively bright spot was the six-month sales outlook, which stayed at 45, suggesting builders expect things to improve but not soon, as Finance-Commerce noted.
The South Takes the Sharpest Hit This Month
Not every region felt the pain equally. The South saw its steepest sentiment decline since November 2023, according to Kitco. A surge of new inventory in that region has outpaced what local buyers can absorb—especially with mortgage rates above 6.5%.
The broader picture is one of structural pressure. Government regulation, taxes, and fees now add more than $131,734 to the price of an average new single-family home, which costs around $499,500, according to NAHB Chief Economist Robert Dietz. "This is clearly impeding supply," Dietz said. That regulatory burden alone equals 26.4% of a new home's price.
NAHB Pushes Congress to Act on Three Housing Bills
NAHB Chairman Bill Owens is pointing the finger squarely at Washington. "With the nation short about 1.2 million homes, builder sentiment will remain soft until barriers are eased," Owens said. He called on Congress to pass three specific bills: the 21st Century ROAD to Housing Act, the CONSTRUCTS Act to tackle a 400,000-worker construction labor shortage, and the Energy Choice Act to block state bans on natural gas in new homes.
The House already passed the ROAD to Housing Act in a sweeping 396-to-13 vote in May. The bill now sits in the Senate. Owens and the National Association of Realtors are pressing senators to move fast. NAR President Kevin Brown called it a "comprehensive response" to restore housing access for American families.
Public Homebuilders Face Shrinking Margins and Weak Spring Sales
Even the largest publicly traded homebuilders are not escaping the squeeze. Bloomberg Intelligence analyst Drew Reading said the 2026 spring selling season has been "disappointing," with soft demand leaving many companies' order backlogs "well below last year's levels," according to TipRanks.
Builders are caught in a bind: they need to offer incentives to sell homes, but those incentives eat into already-thin margins. Until mortgage rates cool—which depends partly on broader economic stability—analysts say rate buy-downs and price cuts are the only real tools builders have left to keep inventory moving.
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