United States builder sentiment levels were unchanged in September, but future sales expectations rose ahead of a likely interest rate cut.
Builder confidence in the market for newly built single-family homes was 32 last month, according to the National Association of Home Builders (NAHB) and Wells Fargo Housing Market Index.
“NAHB expects the Fed to cut the federal funds rate at their meeting this week, which will help lower interest rates for builder and developer loans,” said NAHB chief economist Robert Dietz.
“Moreover, the 30-year fixed rate mortgage average is down 23 basis points over the past four weeks to 6.35%, per Freddie Mac. This is the lowest level since mid-October of last year and a positive sign for future housing demand.”
Builder sentiment has remained between 32 and 34 on the Housing Market Index since May, a relatively low reading.
The future sales expectations index rose to 45, up two points from August and its highest reading since March. Traffic from prospective buyers fell by one point to 21.
According to a Housing Market Index survey, 39% of builders said they had cut prices in September. This is an increase from 37% in August, and the highest rate of the post-pandemic period.
The average price reduction was 5%, and has not changed since November 2024. The use of sales incentives decreased from 66% to 65%.
New U.S. home sales fell in July and were down 8.2% year-over-year, per the U.S. Census Bureau. Authorised residential construction also declined that month.
The U.S. Federal Reserve will meet on 16-17 September to consider a rate cut, with markets largely expecting a cut of 0.25%.
