April 15, 2026

Homebuilder confidence fell 4 points in April to 34 after having risen 1 point in March.  Builders are still worried about the imposition of tariffs, high mortgage rates, and affordability.  The breakeven point for this series is 50 so at 34 it is clear that builders are being very cautious.

NAHB Chairman Bill Owens a home builder  and remodeler  from Worthington, Ohio said, “Builder sentiment has fallen back in spring as buyers face ongoing elevated interest rates and growing economic uncertainty. The year started with hopes for housing momentum growth, but risks with respect to the Iran war, energy costs, and declines for consumer confidence have slowed the market.”

Chief Economist Robert Dietz said,, “With oil prices higher in the U.S., 62% of builders reported suppliers have increased building material costs due to higher fuel prices, including gas and diesel.  Energy costs make up approximately 4% of residential construction material input and service costs. With near-term economic risks elevated, 70% of builders reported challenges pricing homes given uncertainty about material costs.””

The survey also found that 36% of builders reported cutting prices in April.  The average price reduction was 5% which is about the same as in other recent months.

Traffic through the model homes declined 3 points in April to 22 after having risen 3 points in March.  Traffic through model homes remains low as still high mortgage rates have reduced the number of interested buyers.  .

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The homebuilders expectations index dropped 7 points in April to 42 after having risen 2 points in March.  Builders remain concerned about both their cost of materials given the tariffs and the rise in oil prices as well as 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 provided a spark of optimism for the first time in a while, but rates have since rebounded to 6.5%.  We expect oil prices to fall as the year progresses and the inflation rate to slow in the second half of the year.   We expect mortgage rates to edge lower to 6.2% by the end of 2026.

Home prices have risen 0.9% in the past year.  The shortfall of homes available for sale is preventing prices from falling rapidly. Home prices should be about unchanged for 2026 as a whole.

If mortgage rates drop a bit, home prices are steady and the economy continues to crank out jobs, wages will rise and housing affordability should increase somewhat in 2026 to the point where a potential buyer has 30% more income than required to purchase a median-priced home.

We expect 2.0% growth in the first quarter and 2.5% growth for the year as a whole.

Stephen Slifer

NumberNomics

Charleston, SC