Builder Confidence Fell to 29, a 14-Year Low, and the West Dropped 10 Points to 20

The West region of the NAHB/Wells Fargo Housing Market Index fell 10 points in October, from 30 to 20, the lowest of the four regions and the sharpest monthly drop of any of them. The national index slid three points to 29, which the National Association of Home Builders survey puts at its lowest since June 2012. Economists polled by Reuters had expected 31.

The number that matters is buyer traffic

Of the three components, prospective buyer traffic fell furthest. It dropped five points to 18, from a steady 23 in July, August and September. Sales expectations for the next six months also dropped five points, to 32, after sitting at 49 in March. Current sales conditions slipped two points to 33.

NAHB chief economist Robert Dietz said buyer traffic is at its lowest since April 2012, excluding the pandemic's onset in April 2020. He attributed it to higher mortgage rates, elevated construction costs and weaker consumer confidence keeping buyers on the sidelines. Those are the builders' own explanations, and the survey measures what builders say, not what buyers do.

Who is paying for the slowdown

Builders are. NAHB reports that 43 percent cut prices in October, the highest share in the 2020-2026 period, while the average cut stayed at 6 percent for the seventh straight month. Another 65 percent used sales incentives, the 19th consecutive month at or above 60 percent. The price cut is not getting deeper. More builders are making it.

The discounts reach only buyers who are already at the table, and traffic is at 18. Freddie Mac's survey put the 30-year fixed mortgage rate at 7.40 percent for the week of October 15, unchanged from the week before and up from 6.27 percent a year earlier. Reuters described that as the highest level in nearly three years.

A regional split that the headline hides

• West: 20, down from 30 in September. It was 26 to 28 from April through August.
• South: 27, down from 29.
• Midwest: 35, down from 40.
• Northeast: 37, up from 35, the only region that gained.

The table does not say why the West fell so far. NAHB's release does not explain it, and a one-month swing in a regional builder panel can move on a small number of respondents. Treat the 20 as a warning, not a trend, until November's reading.

Costs and labor are on the other side of the ledger

Demand is only half of it. NAHB chairman Bill Owens said builders face higher costs for construction loans, building materials and diesel, along with persistent labor shortages. He added that 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. Reuters tied the rise in energy-related material prices and mortgage rates to the Middle East conflict and the war with Iran, and also named tariffs on imports.

The result is a squeeze from both ends. Sagging demand has left builders with excess inventory of unsold new homes, according to Reuters, which also discourages them from starting new single-family projects. Fewer starts today means fewer completed homes later, which is how a demand slump can set up a supply problem.

What is still unknown

The HMI is a sentiment survey, not a sales count. It says nothing about how many homes sold in October, and the Census Bureau's new home sales data will be the harder test. The figures here also rest on one underlying source. NAHB published the survey, and Reuters' account draws on the same release. Freddie Mac's rate data is independent. The index has stayed at or below 40 every month since April 2025, so 29 is a new low inside a long weak stretch rather than a break from a strong one. The 2022 low was 31 in December.

The Reuters report notes that housing affordability is a central issue ahead of the November 3 midterm elections. For a buyer, the practical read is narrower: builders are discounting more often, and with the rate at 7.40 percent, traffic is still falling.