That still leaves sentiment below the neutral mark of 50, where positive and negative views are balanced. Builder confidence remained below neutral for the entire year and hovered in the high 30s for the final quarter of the year.
Buddy Hughes, NAHB chairman and a homebuilder from Lexington, NC, said headwinds continue to hold back the building sector, forcing builders to keep offering incentives.
“Market conditions remain challenging with two-thirds of builders reporting they are offering incentives to move buyers off the fence,” Hughes said. “Meanwhile, builders are contending with rising material and labor prices, as tariffs are having serious repercussions on construction costs.”
Robert Dietz, NAHB’s chief economist, said despite market challenges, some positive signs are emerging.
“In positive signs for the market, builders report that future sales expectations have been above the key breakeven level of 50 for the past three months, and the recent easing of monetary policy should help builder loan conditions at the start of 2026,” Dietz said. “However, builders continue to face supply-side headwinds, as regulatory costs and material prices remain stubbornly high. Rising inventory also has increased competition for newly built homes.”
