Small sentiment gain masked a market still ruled by incentives and tight budgets
Builder confidence ticked higher in March, but the new‑home market remained a story of stubborn affordability pressures and heavy discounting rather than a clear turn in sentiment.
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index rose one point to 38, after an upwardly revised 37 in February, keeping the gauge in negative territory where it sat for months.
A reading below 50 indicated more builders viewed conditions as poor than good.
Despite the modest improvement, the March reading still suggested more builders viewed conditions as poor than good.
NAHB’s survey responses, all collected after the latest flare‑up in the conflict with Iran, pointed to buyers waiting out uncertainty and builders relying on incentives to keep sales moving.
According to a Redfin‑commissioned Ipsos survey of 1,005 US residents conducted March 5–6, one‑quarter of Americans reported canceling or delaying a major purchase such as a home or car because of the conflict.
“Affordability for buyers and builders remains a top concern,” said NAHB chairman Bill Owens, a home builder and remodeler from Worthington, Ohio.
“Many buyers remain on the fence waiting for lower interest rates and due to economic uncertainty. Builders are facing elevated land, labor and construction costs and nearly two-thirds continue to offer sales incentives in a bid to firm up the market.”
NAHB’s March survey showed 37% of builders cut prices, up slightly from 36% in February, with an average price reduction of 6%. The share using sales incentives held at a high 64%, marking the 12th consecutive month above 60%.
“While the Freddie Mac 30-year fixed rate mortgage averaged 6.05% in February, the lowest since August 2022, downpayment hurdles and uncertainty from the conflict with Iran and the price of oil will be headwinds going forward,” said NAHB chief economist Robert Dietz.
“The administration’s executive orders issued last week to reduce regulatory burdens associated with home building are a positive step toward increasing attainable housing supply.”
Affordability squeeze still defined the market
The three main HMI components all improved: current sales rose to 42, expectations for the next six months climbed to 49 and buyer traffic increased to 25.
Regionally, three‑month averages were flat in the Northeast and Midwest, steady in the South at 35 and slightly weaker in the West at 31, underscoring how expensive coastal and Sun Belt markets remained.
Broader affordability gauges told a similar story. Freddie Mac’s primary mortgage survey showed 30‑year rates hovering around 6% in early 2026 – well below their 2023 peaks but still double pre‑pandemic norms.
Industry economists have noted that even as real‑house‑price indices showed some easing, typical payments continued to consume a far larger share of income than before COVID‑19.
Incentives widespread as builders chased cautious buyers
In a February interview, Aequitas Mortgage chief executive Darshit Chokshi warned that aggressive incentives risked masking underlying affordability rather than fixing it.
“New build homes are still priced very high,” Chokshi told Mortgage Professional America. “Another thing, builders, as we all know, offer incentives to cover closing costs or buy down rates. I think that practice needs to be made illegal, because what they're doing is they're inflating the purchase price to give the same money back to buy down the rates.”
He argued that inflating prices to fund buydowns could ultimately make qualifying harder for some borrowers.
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