US Builder Confidence for Newly Built Single-Family Homes Falls in January

On Friday, the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) reported that builder confidence for newly built single-family homes fell in January to 37, down from 39 in December. Sentiment has now remained in negative territory for 21 consecutive months.

The January HMI survey showed that 40% of builders reported cutting prices, unchanged from December and marking the third consecutive month this share has been at 40% or higher—the longest stretch since May 2020. The average price reduction increased to 6% in January from 5% in December. The use of sales incentives held at 65%, marking the tenth straight month above 60%.

All three HMI components declined in January. The index measuring current sales conditions slipped 1 point to 41. The gauge tracking prospective buyer traffic fell 3 points to 23. The index measuring sales expectations over the next six months dropped 3 points to 49, falling below the breakeven level of 50 for the first time since September.

Regional three-month moving averages were mixed. The Northeast fell 2 points to 45, the Midwest was unchanged at 43, the South edged down 1 point to 35, and the West rose 1 point to 35.