US Builder Confidence Inches Higher in September as Mortgage Rates Decline

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released on Tuesday reported that builder sentiment in the market for newly built single-family homes in September posted a reading of 41, up 2 points from August’s reading of 39. This ends a series of four consecutive months of declines.

All three HMI indices were up in September:

• The index charting current sales conditions rose 1 point to a reading of 45.
• The component measuring sales expectations in the next six months increased 4 points to a reading of 53.
• The gauge charting traffic of prospective buyers gained 2 points to a reading of 27.

The three-month moving averages for regional HMI scores were as follows:

• The Northeast declined 3 points to a reading of 49.
• The Midwest edged 1 point higher to a reading of 40.
• The South decreased 1 point to a reading of 41.
• The West increased 2 points to a reading of 39.

NAHB also noted that in the latest HMI survey, the share of builders cutting prices dropped in September for the first time since April, down 1 point to 32%. Moreover, the average price reduction was 5%, the first time it has been below 6% since July 2022. Meanwhile, the use of sales incentives fell to 61%, down from 64% in August.