- Prior was 38
- Single family 37 vs 42 prior
- Prospective buyers 22 vs 25 prior
- Sales expectations 42 vs 49 prior
The US housing industry is in a deep recession and rising rates following the Iran war aren’t going to help. If there’s any good news it’s that borrowing costs have ticked down since the ceasefire. We are a long way from the Fed getting back to rate cuts though and the latest indications are that the economy is solid.
The NAHB/Wells Fargo Housing Market Index (HMI), published monthly by the National Association of Home Builders, is one of the most widely followed gauges of sentiment in the U.S. residential construction industry. Derived from a survey that NAHB has conducted for more than 40 years, the index polls roughly 900 home builders nationwide, asking them to rate current single-family home sales as good, fair, or poor, to assess expected sales over the next six months, and to evaluate the traffic of prospective buyers. Scores from these three components are combined into a seasonally adjusted composite index, where 50 is the dividing line — readings above 50 indicate that more builders view conditions favorably, while readings below signal a negative outlook.
The HMI has remained stubbornly below 50 throughout 2025 and into 2026, reflecting persistent affordability headwinds from elevated mortgage rates, high construction costs, and stretched home prices relative to incomes. The index closed 2025 at 39 in December, then slid to 37 in January 2026 as all three subcomponents declined. February brought a further dip to 36, a five-month low, with future sales expectations falling to 44 — well below the breakeven threshold. March saw a modest rebound to 38, with all three components ticking higher: current sales rose to 42, expected sales improved to 49, and buyer traffic edged up to 25.
Throughout this period, roughly two-thirds of builders have reported offering sales incentives, and over a third have been cutting prices — averaging around 6% — underscoring the degree to which affordability constraints continue to weigh on demand despite lower mortgage rates relative to a year ago.
