Homebuilder confidence rose modestly at the end of 2026 but remained negative, while December’s measure of future sales expectations stayed in positive territory for the third month in a row after the Federal Reserve’s year-end rate cut.  

Builder confidence in the market for newly built single-family homes came in at 39 in December, up one point from November, the National Association of Home Builders reported, citing the NAHB/Wells Fargo Housing Market Index (HMI). Despite the modest increase, the reading spent all of 2025 in negative territory (under 50).    

“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, a homebuilder and developer from Lexington, North Carolina. “Meanwhile, builders are contending with rising material and labor prices, as tariffs are having serious repercussions on construction costs.” 

The HMI gauging future sales expectations rose from 51 to 52, its highest reading since March, while the component measuring current sales conditions rose one point to 42, and the index charting prospective-buyer traffic remained at 26.  

“In positive signs for the market, builders report that future sales expectations have been above the key breakeven level of 50 for the past three months, and the recent easing of monetary policy should help builder loan conditions at the start of 2026,” NAHB Chief Economist Robert Dietz said. “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.” 

That competition translated into price reductions, with 40% of respondents reporting cutting prices in December, the second month in a row since May 2020 that the share has been 40% or higher. The average price reduction was 5%, down from 6% in November, while the use of sales incentives hit 67%, its highest level of the post-Covid era, NAHB said.    

Regionally, the three-month averages for the HMI scores were mixed, with the Midwest rising two points to 43, the Northeast falling a point to 47, the South climbing two points to 36, and the West jumping four points to 34.   

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.