Homebuilder confidence remained low in September, but the measure of future sales expectations hit a six-month high on an anticipated rate cut from the Federal Reserve Wednesday. 

Builder confidence in the market for newly built single-family homes came in at 32, the same reading as in August, the National Association of Home Builders reported, citing the NAHB/Wells Fargo Housing Market Index (HMI). The reading has now been negative — under 50 — for 17 months in a row.   

However, the HMI gauging future sales expectations rose from 43 to 45, its highest reading since March. The component measuring current sales conditions was flat at 34, while the gauge charting prospective-buyer traffic slipped one-point to 21. 

“NAHB expects the Fed to cut the federal funds rate at their meeting this week, which will help lower interest rates for builder and developer loans,” NAHB Chief Economist Robert Dietz said. “Moreover, the 30-year fixed-rate mortgage average is down 23 basis points over the past four weeks to 6.35%, per Freddie Mac. This is the lowest level since mid-October of last year and a positive sign for future housing demand.” 

Each month, NAHB/Wells Fargo surveys builders, asking them to rate single-family home sales over the next six months as good, fair or poor. It also asks builders to rate traffic of prospective homebuyers as “high to very high,” “average” or “low to very low.” Scores are then calculated, and any number above 50 indicates that more builders view market conditions as good/high than poor/low.   

“While builders continue to contend with rising construction costs, a recent drop in mortgage interest rates over the past month should help spur housing demand,” NAHB Chairman Buddy Hughes said.  

The survey also pointed to the softness of the market, NAHB said, noting that 39% of builders cut home prices in September, up from 37% in August and the highest percentage in the post-Covid period. The average price reduction was 5%, the same as it’s been since November 2024. The use of sales incentives was down 1% from last month, at 65%.   

The three-month averages for regional Housing Market Index scores were mixed, with the Northeast flat at 44, the Midwest rising one point to 42, the South flat at 29 and the West rising one point to 26.