Homebuilders benefit especially from falling interest rates, as they reduce the cost of construction loans used to finance new projects, as well as potentially lower mortgage rates for their customers.
"The recent easing of monetary policy should help builder loan conditions at the start of 2026,” said NAHB Chief Economist Robert Dietz. “However, builders continue to face supply-side headwinds, as regulatory costs and material prices remain stubbornly high. Rising inventory also has increased competition for newly built homes.”
The use of
price cuts remained prevalent this month, with 40% of builders reported cutting prices in December. It marked the second consecutive month the share has been at 40% or higher, a level not seen since May 2020.
As well, 67% of builders reported using sales incentives such as mortgage rate buy-downs this month, the highest share in more than five years.
Homebuilders have been increasingly forced to embrace price cuts and incentives this year, with many potential buyers remaining on the sidelines due to affordability concerns and economic uncertainty.
“Market conditions remain challenging with two-thirds of builders reporting they are offering incentives to move buyers off the fence,” said NAHB Chairman Buddy Hughes. “Meanwhile, builders are contending with rising material and labor prices, as tariffs are having serious repercussions on construction costs.”
The builder sentiment report comes as key information on new-home construction, and sales remains delayed due to the government shutdown in October, with no new data released beyond August yet.
The U.S. Census Bureau, which coordinates the release of new-home sales and construction data, has still not set a timetable for publishing reports on September, October, and November.
