After price cuts for new builds outpaced those for existing homes late last year, home builders’ responses to a popular industry survey signal a pullback from that sales incentive tool this year.
The National Association of Home Builders (NAHB) released an update to its NAHB/Wells Fargo Housing Market Index (HMI) on Tuesday showing a reading of 36, a single-point decline from January and three-point decline from December.
As builder sentiment of the new-home market remains dour, 65% of builders reported the use of sales incentives last month, flat from January levels. But only 36% reported slashing prices, down from 40% in the three preceding months.
The HMI reflects a monthly survey of single-family builders asked to assess three aspects of the home sales environment: present conditions for single-family sales, expectations for sales of single-family homes over the next six months, and traffic of prospective buyers.
Among the component indexes, builder attitudes on current sales conditions were flat from January at 41. Six-month sales outlooks declined by three points to 46 after briefly crossing the 50-point threshold in December, while new-home buyer traffic fell two points to 22.
On a scale of 0 to 100, the overall index has not crossed above 50, which separates majority-positive and majority-negative market sentiments, since April 2024.
However, the NAHB recently published responses to special questions that the association puts to its members early every calendar year, asking them to rank the significance of various challenges they faced the previous year, as well as the prevalence of challenges they expect to face during the year ahead.
Responses to this survey suggest more optimism for new-home sales activity than the broader index’s decline in six-month sales sentiment would appear to indicate, though the chief economist of the NAHB told Scotsman Guide in a recent interview that he expects only a “slight uptick” in single-family new-home starts and sales in 2026.
Among the 428 respondents of the 2,867 members queried in January’s special-questions survey, the category of “problems attracting buyers” declined broadly from last year to this year, potentially making price cuts — often seen by builders as the most draconian sales incentive — less prevalent in 2026.
The 81% of builders who reported buyers expecting “prices or rates will decline if they wait” fell to 74% in their expectations for sales conditions in 2026. Those who observed “negative media reports making buyers cautious” fell from 62% in 2025 to 56% for year-ahead expectations.
Home builders expressed optimism that job market anxiety and broader economic uncertainty would keep fewer buyers on the sideline in 2026 than 2025. They expect current homeowners will face less trouble selling their existing homes in 2026 than they may have faced last year, when mortgage rates were higher and buyers were more cautious.
New-home sales tumbled in December, despite the higher share of price cuts, according to the Mortgage Bankers Association (MBA). Official new-home sales and permitting figures from the U.S. Census Bureau for November and December — which were delayed due to the federal government shutdown last fall — are due out on Thursday and Friday.
The MBA’s latest projections showed the annual pace of new-home sales falling to around 640,000 units in December, about 15% slower than November but 6.5% higher year over year. Full-year estimates show new-home sales of around 684,000, compared to 685,000 in 2024.
On a quarterly basis, however, the MBA projects that new-home sales activity was on the upswing to close out 2025, with a sales pace of 664,000 in the second quarter and 696,000 in the third quarter swelling to 722,000 in the last three months of the year.
