Michael Sasso
(Bloomberg) — Confidence among U.S. homebuilders edged up in December as builders continued to roll out sales incentives to motivate buyers.
The National Association of Home Builders and Wells Fargo’s market conditions index rose 1 point this month to 39, the highest level since April. Still, values below 50 mean more builders rate conditions as poor than good.
Mortgage rates have been hovering in the 6.3%-6.4% range for the past few months, near one-year lows, which has helped some buyers stop waiting on the sidelines. However, builders are still forced to offer price breaks and other concessions that eat into profits.
This month, 67% of builders reported using sales incentives, a record for the post-COVID period, while 40% reported price reductions, a still high proportion.
“Builders continue to face supply-side headwinds as regulatory costs and material prices remain high,” said NAHB Chief Economist Robert Dietz. “Rising inventory also increases competition for new construction homes.”
Among components of the NAHB survey, a gauge of sales expectations for the next six months rose 1 percentage point in December to 52, the third straight month that future expectations exceeded breakeven levels. Meanwhile, the current sales volume index edged up 1 percentage point to 42, while the potential buyer traffic index was flat.
Although the Federal Reserve cut interest rates for the third consecutive time last week, it’s unclear how much that will reduce housing financing costs. Consumer confidence data shows many people are still struggling with the high cost of living.
But economists and industry analysts expect the housing market to pick up slightly in 2026 as home prices fall in many cities, especially in the Sun Belt, and fewer people lock in mortgages at lower rates. Home closing volumes for publicly traded builders are expected to rise slightly next year, following a projected 4% decline in 2025, Bloomberg Intelligence analyst Drew Reading said in a Dec. 1 report.
By region, builder confidence increased the most in the central and western regions, and the western region also rebounded. Sentiment fell in the South, the largest home-building region.
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Last modified: December 16, 2025
