U.S. Housing Market Index Hits More Than 14-Year Low, Falls Below Expectations

NAHB Releases Housing Market Index
Below 50 Indicates "Poor" Market Conditions

Sentiment among U.S. home builders fell to its lowest level in 14 years. The decline appears to reflect the impact of high interest rates and rising construction costs.

On October 19 local time, the National Association of Home Builders (NAHB) announced that its Housing Market Index (HMI) fell 3 points from the previous month to 29 in October. This was its lowest level since June 2012 and below the market forecast of 31 compiled by Dow Jones.

The NAHB Housing Market Index measures home builders' sentiment about the market for newly built single-family homes. A reading below 50 indicates that more builders view market conditions pessimistically than optimistically. The index has remained below 50 for more than two years.

By component, the index of current sales conditions fell 2 points from the previous month to 33. The index of sales expectations for the next six months declined 5 points to 32. The index measuring prospective buyer traffic also fell 5 points from the previous month to 18.

High interest rates, including mortgage rates above 7%, and rising prices for building materials and energy appear to have weighed on the market. A labor shortage stemming from The Trump Administration's stepped-up immigration enforcement is also reportedly adding to builders' burdens.

More builders are offering incentives, including cutting home prices, to counter weak demand. In the latest survey, 43% of respondents said they had reduced home prices, the highest share since 2020. The average price cut was 6%. The share of builders offering sales incentives, such as mortgage-rate buydowns, also reached 65%.

This content was produced with the assistance of AI translation services.