Builder Sentiment Slips While NY Manufacturing Shows Modest Expansion — Evening Brief – 02.17.26

Homebuilder confidence remained under pressure in February as affordability challenges and cautious consumer sentiment continued to weigh on the single-family housing market. 

The NAHB/Wells Fargo Housing Market Index (HMI) registered 36, down from 37 in January and below the consensus forecast of 38. Readings below 50 indicate that more builders view conditions as poor than good. 

Forward-looking expectations also deteriorated. The index measuring anticipated sales over the next six months declined three points to 46, signaling weaker optimism heading into the traditionally stronger spring selling season. 

“Builders reduced their expectations for future sales as buyers report affordability challenges, which is contributing to declining consumer confidence for the overall economy,” said NAHB Chairman Buddy Hughes. 

In response to soft demand, builders continue to rely on incentives to move inventory. Approximately 36% of builders reported cutting prices in February, compared to 40% in January. Meanwhile, 65% offered sales incentives, unchanged from the prior month. 

“While the majority of builders continue to deploy buyer incentives, including price cuts, many prospective buyers remain on the sidelines,” Hughes added. 

Elevated mortgage rates, construction costs and limited affordability continue to constrain buyer activity, even as inflation pressures show signs of easing. 

“The solution for the housing market is the enactment of policies that will bend the construction cost curve and enable additional supply of attainable housing,” said NAHB Chief Economist Robert Dietz. 

“On the positive side, easing inflation should continue to allow lower interest rates for mortgages and builder loans,” Dietz added.