Novvember 18, 2025

Homebuilder confidenced rose 1 point in Novemer to 38 after having climbed 5 points in October.  Builders are still worried about the imposition of tariffs, high mortgage rates,and the cost of materials, but they are less concerned than they were a couple of months ago..  The breakeven point for this series is 50 so at 38 it is clear that builders are being very cautious.  However the expectations component surpassed the breakeven mark of 50 in both October and November which is the first time that has happened since January.

NAHB Chairman Buddy Hughes, a home builder and developer from Lexington N.C.  said, “While lower mortgage rates are a positive development for affordability conditions, many buyers remain hesitant because of the recent record-long government shutdown and concerns over job security and inflation.  More builders are using incentives to get deals closed, including lowering prices, but many potential buyers still remain on the fence.”

Chief Economist Robert Dietz said, ““We continue to see demand-side weakness as a softening labor market and stretched consumer finances are contributing to a difficult sales environment.  After a decline for single-family housing starts in 2025, NAHB is forecasting a slight gain in 2026 as builders continue to report future sales conditions in marginally positive territory.”

The survey also found that 41% of builders reported cutting prices in November.  The average price reduction was 6% which is about the same as in other recent months.

Traffic through the model homes rose 1 point in November to 26 after having climbed 4 points in October..  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 declined 3 points in November to 51 after having surged by 9 points in October.  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.  But the recent decline in the 30-year mortgage rate has provided a spark of optimism for the first time since the beginning of the year.

Mortgage rates have declined in recent weeks to 6.3%.   We expect mortgage rates to edge lower to 6.0% by the end of the year. and 5.8% by the end of 2026.

Home prices have risen 1.5% 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 a 0.6% decline in the first quarter and 3.8% growth in the second quarter, we expect 3.3% GDP growth in the third quarter and 2.0% GDP growth in Q4 as the government shutdown slows the economy somewhat..

Stephen Slifer

NumberNomics

Charleston, SC