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Housing · October 19, 2026 · 3 min read

Builder sentiment falls to 29 in October, a 14-year low, as mortgage rates top 7%

By Econ Data Tools Editorial Team

Published October 19, 2026 • Updated October 19, 2026

Reviewed by Editorial QC

The NAHB/Wells Fargo Housing Market Index fell three points to 29 in October 2026, the lowest reading since June 2012. All three components declined, buyer traffic hit its lowest level since April 2012 excluding the pandemic onset, 43 percent of builders cut prices, and 65 percent used sales incentives.

Builder confidence in the market for newly built single-family homes fell three points to 29 in October, according to the NAHB/Wells Fargo Housing Market Index released October 19, 2026. The reading is the lowest since June 2012, a 14-year low. NAHB attributed the decline to rising mortgage rates, energy and material costs, and worsening labor and lot conditions. All three major HMI components posted losses. The index measuring current sales conditions fell two points to 33, the index gauging sales expectations for the next six months dropped five points to 32, and the index charting prospective buyer traffic fell five points to 18. NAHB Chief Economist Robert Dietz said buyer traffic is at its lowest level since April 2012, excluding the onset of the pandemic in April 2020. Price cutting remained widespread. The survey found that 43 percent of builders cut prices in October, the highest share recorded during the 2020-2026 period, while the average price reduction held at 6 percent for the seventh consecutive month. Meanwhile, 65 percent of builders reported using sales incentives, the 19th straight month in which at least 60 percent have done so. "Mortgage rates have climbed well above 7% in recent weeks, and higher gas prices and inflation have further weakened buyer traffic across much of the country," said NAHB Chairman Bill Owens, a home builder and remodeler from Worthington, Ohio. Owens said builders also face higher costs for construction loans, building materials and diesel, and that more than one-third of builders reported immigration enforcement activity in their market areas during the past month, causing construction delays and discouraging legal workers from reporting to work. "Housing remains squeezed by supply-side constraints and significant affordability challenges," said Dietz. "Demand persists, but higher mortgage rates, elevated construction costs and weaker consumer confidence are keeping more buyers on the sidelines." On a three-month moving average, regional HMI scores fell across all four regions: the Northeast slipped one point to 38, the Midwest fell three points to 40, the South fell one point to 30 and the West dropped two points to 26. NAHB called the Midwest a relative bright spot for single-family building, citing a 2.9 percent rise in permits. The HMI is derived from a monthly survey NAHB has conducted for more than 40 years, asking builders to rate current single-family sales and six-month expectations as good, fair or poor, and buyer traffic as high to very high, average, or low to very low. Any score above 50 indicates more builders view conditions as good than poor. The October result extends a long run below that threshold and follows Freddie Mac's October 15 reading that put the average 30-year fixed mortgage rate at 7.40 percent.

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