The NAHB/Wells Fargo Housing Market Index dropped to 29 in October, down three points. NAHB said that is the weakest builder confidence reading since June 2012, when the industry was still climbing out of the post-2008 slump.
With the index well below 50, homebuilding remains in contraction territory. As NAHB chief economist Robert Dietz put it, "Housing remains squeezed by supply-side constraints and significant affordability challenges."
Activity is chilled as more would-be buyers sit out. Mortgage costs are a key brake: Freddie Mac put the average 30-year fixed at 7.4% last week, a three-year high, while stubborn prices keep affordability tight.
Costs are pressing from the other side. Producer price data show prices charged by building material and supplies dealers jumped 28.8% year over year in September. And 43% of builders cut prices in October, the highest share since 2020, per NAHB.
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Labor is another pinch point. NAHB chairman Bill Owens said over a third of builders reported that immigration enforcement caused holdups and prompted some workers not to show up, tightening conditions that can lift costs if wages rise to attract staff.
The broader indicators rhyme with that mood. Capital Economics estimates 2026 is tracking to be the weakest year for home sales since 2011. Redfin estimates that, excluding the pandemic slowdown, pending sales fell to a 14-year low in September. Boutique researcher Zelman says new-home cancellations in the West reached their highest since November 2023.
Economists do not see quick relief. Oxford Economics' Sara Godfrey called the latest reading "depressed" and said it aligns with a view that housing will remain stagnant through next year. Goldman Sachs said it expects demand to remain "tepid," and projected that existing home sales will decline in the months ahead. Pantheon Macroeconomics' Oliver Allen projected a "meaningful slowdown" in new home sales and argued that, with rates where they are, confidence could sink significantly in the next month or two.
The bottom line: confidence is sliding, rates are elevated, cancellations are rising, and input costs are heavier, while many builders are cutting prices to keep deals moving. That mix typically pressures homebuilder margins and can spill into construction suppliers and real estate services. Most forecasters do not expect a near-term rebound, citing rates likely to stay higher for longer, so watch mortgage moves and any stabilization in sales for signs the drag may ease.
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