Builder Sentiment Holds Steady as Market Awaits Rate Relief

Builder Confidence Steady as Housing Starts Decline

September brought a mixed message for the housing market: builder confidence remained steady while new construction slowed. According to the National Association of Home Builders (NAHB), the builder confidence index held at 32—well below the 50 level that marks growth, but expectations for future sales climbed to a six-month high.

This cautious optimism reflects the belief that lower interest rates may soon bring buyers back into the market. Mortgage relief could be a key catalyst, especially after recent construction setbacks.

In August, housing starts fell 8.5% to an annual pace of 1.31 million units, down from July’s surprise surge and short of expectations. Both single-family and multi-family projects posted declines. Building permits also dropped 3.7%, marking their lowest level in five years, with single-family permits hitting a 2025 low.

Currently, 611,000 single-family homes are under construction—2.1% fewer than in July and nearly 5% fewer than a year ago. This is the lowest level since early 2021, underscoring the supply constraints that continue to weigh on the market.

NAHB Chief Economist Robert Dietz noted that an anticipated shift in monetary policy could lower borrowing costs for builders. If construction and development loans become cheaper, builders may be able to increase supply to meet renewed demand.

Bottom Line:

Buyers may soon find more favorable financing conditions, but supply will take time to catch up. Sellers can benefit from continued demand in a tight market, while buyers should be prepared to move quickly as opportunities arise.