Homebuilder confidence fell one point from July to a reading of 32 in August as high mortgage rates, weak buyer traffic and supply-side challenges kept builder sentiment in negative territory, the National Association of Home Builders reported, citing the NAHB/Wells Fargo Housing Market Index.  

Each month, NAHB/Wells Fargo surveys builders, asking them to rate single-family home sales over the next six months as good, fair or poor. It also asks builders to rate traffic of prospective homebuyers as “high to very high,” “average” or “low to very low.” Scores are then calculated, and any number above 50 indicates that more builders view market conditions as good/high than poor/low.  

The reading has now been negative — under 50 — for 16 months in a row.  

“Affordability continues to be the top challenge for the housing market and buyers are waiting for mortgage rates to drop to move forward,” NAHB Chairman Buddy Hughes said. “Builders are also grappling with supply-side headwinds, including ongoing frustrations with regulatory policies connected to developing land and building homes.” 

The index charting current sales conditions fell one point from July to 35, while the component measuring sales expectations in the next six months was flat at 42, and the gauge charting prospective-buyer traffic rose two points to 22 — still a very low level, NAHB noted.   

The survey also showed that 37% of builders cut home prices in August, down from 38% in July. The average price reduction was 5%, the same as it’s been since November 2024. The use of sales incentives was up 4% from last month, at 66%.  

The three-month averages for regional Housing Market Index scores were mixed, with the Northeast falling one point to 44, the Midwest rising one point to 42, the South decreasing one point to 29 and the West sliding one point to 24. 

“Housing affordability is central to the outlook for economic growth and inflation,” NAHB Chief Economist Robert Dietz said. “Given a slowing housing market and other recent economic data, the Fed’s monetary policy committee should return to lowering the federal funds rate, which will reduce financing costs for housing construction and indirectly help mortgage interest rates.”