February 17, 2026

Homebuilder confidenced fell 1 point in February to 36 after having declined 2 points in January.  Builders are still worried about the imposition of tariffs, high mortgage rates.  The breakeven point for this series is 50 so at 36 it is clear that builders are being very cautious.  H

NAHB Chairman Buddy Hughes, a home builder and developer from Lexington N.C. said, “Builders reduced their expectations for future sales as buyers report affordability challenges, which is contributing to declining consumer confidence for the overall economy, While the majority of builders continue to deploy buyer incentives, including price cuts, many prospective buyers remain on the sidelines. Although demand for new construction has weakened, remodeling demand has remained solid given a lack of household mobility.”

Chief Economist Robert Dietz said, “Housing affordability remains an ongoing challenge at the start of 2026.  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. On the positive side, easing inflation should continue to allow lower interest rates for mortgages and builder loans.”

The survey also found that 36% of builders reported cutting prices in February.  The average price reduction was 6% which is about the same as in other recent months.

Traffic through the model homes declined 2 points in Feruary to 22 after having declined 2 points in Janauary.  The cold and snoqwy weather conditions in January undoubtedly played a role. Traffic through model homes remains low as still high mortgage rates have reduced the number of interested buyers.  While mortgage rates have declined slightly, most potential buyers are waiting for further rate cuts in the months ahead.

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The homebuilders expectations index fell 3 points in February to 46 tafter having declined 3 points in January.  Builders remain concerned about both their cost of materials given the tariffs and the willingness of their potential buyers to buy given the uncertainty that exists today.

The decline in the 30-year mortgage rate earlier in the year has provided a spark of optimism for the first time since the beginning of the year..   We expect mortgage rates to edge lower to 5.6% by the end of 2026.

Home prices have risen 1.4% in the past year.  The shortfall of homes available for sale is preventing prices from falling rapidly. However, prices have begun to decline slowly in recent months.  We expect those price declines to continue in the months ahead.

If mortgage rates drop a bit, home prices decline slightly, and the economy continues to crank out jobs, wages will rise and housing affordability should increase considerablly in 2026.

Following 4.4% growth in the third quarter, we expect 3.8% GDP growth in the fourth quarter and 3.8% GDP growth in Q1 of this year..

Stephen Slifer

NumberNomics

Charleston, SC