Late last year, roughly two‑thirds of builders reported using incentives, while average price reductions hovered around 6% as companies tried to get deals closed in the face of affordability stress. Price cuts and incentives have become increasingly necessary as elevated rates and a growing pipeline of new supply met cautious buyers.
Labor and cost pressures continued to squeeze
Even as demand cooled, chronic labor shortages did not disappear. A recent assessment by Associated Builders and Contractors suggested the US construction industry would need to attract about 349,000 net new workers in 2026 just to replace retirees and maintain capacity.
The HMI’s underlying components pointed in the same direction. The index measuring current sales conditions slipped to 41, the gauge charting traffic of prospective buyers dropped to 23, and the measure of future sales fell to 49, moving back below the neutral 50 threshold.
Regional three‑month moving averages showed sentiment softest in the South and West, at 35, and somewhat firmer in the Northeast and Midwest.
NAHB’s HMI, compiled for more than four decades, is based on a monthly survey of single-family builders. Participants are asked to rate current home sales and expectations for the next six months as “good,” “fair,” or “poor,” and to assess buyer traffic as “high to very high,” “average,” or “low to very low.”