NAHB's housing market index slipped to 29 as 43% of builders cut prices in October.
The latest survey showed 43% of builders cutting prices in October, the largest share seen in the 2020-2026 period. The average reduction stayed at 6% for a seventh straight month. Separately, 65% of builders reported offering sales incentives in October, the 19th consecutive month in which at least 60% have done so.
Those moves came in response to another rise in borrowing costs, with 30-year fixed US mortgage rates close to 7.5% during the period.
Produced by the National Association of Home Builders, the NAHB Housing Market Index is a monthly measure of builder sentiment. It is released in the middle of the month at 10 am ET, normally one day before the government's housing starts report, making it the earliest monthly read on the US housing market.
The gauge is based on a survey of NAHB members, focusing on single-family homebuilders. They evaluate three items: current new-home sales, expected sales in the coming six months and prospective-buyer traffic. Their responses produce a headline index ranging from 0 to 100. At 50, sentiment is evenly split; anything above that means builders with a positive outlook outnumber those with a negative one. The buyer-traffic measure has historically sat far below the other two and rarely rises above 50 even in strong markets. NAHB also releases regional readings for the Northeast, Midwest, South and West as three-month moving averages.
The extra questions on price cuts and incentives added in recent years have become some of the survey's most valuable details. They reveal the size of builders' discounts and mortgage-rate buy-downs intended to keep homes selling, information the headline index misses.
The index is highly sensitive to mortgage rates and affordability, and it generally leads housing starts and building permits. It seldom moves the broader markets on its own, but homebuilder stocks watch it closely, and it is an early signal for residential investment, an important swing factor in GDP. Builders' comments on construction costs — lumber, materials and tariffs included — also feed into the inflation picture.
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