US Homebuilder Sentiment Falls to Lowest Level Since 2012

Rising borrowing costs and construction expenses pushed US homebuilder confidence to its lowest level in more than 14 years in October, according to a survey released Monday, October 19, 2026. The National Association of Home Builders/Wells Fargo Housing Market Index fell three points to 29, reflecting weaker demand, labor shortages, and higher material costs amid the Middle East conflict.

The index reached its lowest reading since June 2012, falling short of the 31 economists surveyed by Reuters had expected. The decline highlights mounting pressure on the US housing market as elevated financing costs and home prices continue to constrain affordability.

Freddie Mac reported that the average rate on a 30-year fixed-rate mortgage reached 7.40% last week, its highest level in nearly three years. Mortgage rates have risen alongside Treasury yields as the US-Israeli war with Iran fuels inflation concerns, adding to the financial burden facing prospective homebuyers.

Builders also face higher construction loan costs, more expensive building materials and diesel, and persistent labor shortages. NAHB chairman Bill Owens said immigration enforcement has further disrupted construction activity in markets across the country.

"Builders are also contending with higher costs for construction loans, building materials and diesel, as well as persistent labor shortages," said NAHB chairman Bill Owens.

Owens also cited the effects of immigration enforcement on construction schedules and workforce participation. More than one-third of builders nationwide reported immigration enforcement activity in their market areas during the previous month, according to his statement.

"Nationwide, more than one-third of builders reported immigration enforcement activity in their market areas during the past month, causing construction delays and discouraging legal workers from reporting to work," said NAHB chairman Bill Owens.

Weak demand has left builders with excess inventories of unsold new homes, discouraging new single-family housing projects. The combination of high mortgage rates and elevated home prices has also placed housing affordability among the central economic concerns ahead of the November 3 midterm elections, which will determine control of Congress.

Builders have increasingly relied on price reductions and sales incentives to attract buyers. The share of builders cutting prices rose to 43% in October, the highest proportion recorded during the 2020-2026 period, according to the survey.

The average price reduction remained at 6% for the seventh consecutive month. Meanwhile, 65% of builders reported using sales incentives, marking the 19th consecutive month in which at least 60% had offered such measures.

The survey's measure of current sales conditions dropped two points to 33. Its gauge of expected sales over the next six months declined five points to 32, while the prospective buyer traffic index fell five points to 18.

Earlier this year, President Donald Trump declined to sign a bipartisan housing affordability bill, describing it as "a big yawn" while urging Congress to prioritize separate, contentious voting requirements.