by While many builders are using incentives/price reductions, NAHB notes that many prospective homebuyers remain on the sidelines
WASHINGTON — Builder confidence for residential construction fell slightly in February from the previous month, reflecting concerns about high housing price-to-income ratios and elevated land and construction costs, according to the recently released National Association of Home Builders Wells Fargo Housing Market Index.
The NAHB/HMI fell to 36, from 37 in January, which was the second monthly decline of 2026.
The authors said that the survey results highlight that housing affordability remains a key challenge in the new year.
“Builders reduced their expectations for future sales as buyers report affordability challenges, which is contributing to declining consumer confidence for the overall economy,” said NAHB Chairman Buddy Hughes, a homebuilder and developer from Lexington, North Carolina. “While the majority of builders continue to deploy buyer incentives, including price cuts, many prospective buyers remain on the sidelines. Although demand for new construction has weakened, remodeling demand has remained solid given a lack of household mobility.”
NAHB Chief Economist Robert Dietz agreed that housing affordability remains a challenge that must be addressed.
“The solution for the housing market is the enactment of policies that will bend the construction cost curve and enable additional supply of attainable housing,” he said. “On the positive side, easing inflation should continue to allow lower interest rates for mortgages and builder loans.”
Already there are indications that builders are trying to do their part to make homes more affordable. For example, some 36% of builders cut prices in February. While down from 40% in January and the lowest percentage of builders cutting prices since May at 34%, the report said the average price reduction remains at 6%.
In addition, some 65% of builders reported using sales incentives in February, unchanged since January and the 11th straight month it has been above 60%.
The data is derived from a monthly survey that NAHB has been conducting for more than 40 years, gauging builder perceptions of home sales and sales expectations for the next six months and also the traffic of perspective buyers. The responses are used to calculate a seasonally adjusted index in which any number of 50 indicates more builders view conditions as good versus poor.
Other highlights of the report were as follows:
+ The HMI index gauging current sales conditions held steady at 41 from January to February.
+ The index measuring future sales fell three points to 46.
+ And the gauge charting traffic of prospective buyers fell two points to 22.
By region, three-month moving averages were as follows:
+ The Northeast fell one point to 43.
+ The Midwest held steady at 43.
+ The South fell one point to 35.
+ The West fell two points to 33.
The report highlights that retailers have an opportunity to track new home prices in their own regions, seeing what types of homes are being built and how expensive or affordable they might be. Using this data, retailers have an opportunity to curate a product mix based on the types of homes that are being built in their respective regions, offering a mix that is both affordable and value-driven.
This applies to consumers shopping for new furniture on their own as well as those using a designer. Everyone wants a value and particularly furniture that is commensurate with the type of home they are buying.
We also agree that housing affordability is key as it provides more room in the budget for new furniture and other home décor.
