Key Highlights

  • The NAHB/Wells Fargo Housing Market Index fell three points to 29 in October, its lowest reading since June 2012.
  • A record 43 percent of builders cut prices in October, while 30-year Mortgage rates averaged 7.40 percent last week.
  • Shares of D.R. Horton, PulteGroup, NVR and Toll Brothers all fell between 1.4 and 2.3 percent Monday.
  • Lumber futures fell below USD 527 per thousand board feet, retreating toward a two-year low amid weak demand.

Confidence Falls to a 14-Year Low

US homebuilder confidence fell to its lowest level in nearly 14 and a half years in October, as rising mortgage rates and higher costs for energy related building materials weighed on the sector. The National Association of Home Builders and Wells Fargo Housing Market Index dropped three points to 29 this month, the lowest reading since June 2012, below the 31 level economists had forecast. All three components of the index posted losses: current sales conditions fell two points to 33, sales expectations for the next six months dropped five points to 32, and prospective buyer traffic declined five points to 18, its lowest since April 2012 outside the pandemic’s onset.

Builders Cite Rates, Labor and Tariffs

NAHB Chairman Bill Owens said builders are contending with higher costs for construction loans, building materials and diesel, as well as persistent labor shortages, noting that more than one-third of builders reported immigration enforcement activity in their market areas over the past month, causing delays and discouraging legal workers from reporting to work. NAHB Chief Economist Robert Dietz said housing remains squeezed by Supply side constraints and significant affordability challenges, adding that elevated mortgage rates, construction costs and weaker consumer confidence are keeping more buyers on the sidelines even as underlying Demand persists.

Price Cuts Hit a Record Share

The share of builders cutting prices jumped to 43 percent in October, the highest share since 2020, while 65 percent used sales incentives for a 19th straight month, underscoring how far builders are going to move inventory in a weakening market. Regional data told a similarly uneven story: three month moving averages softened across the Northeast, Midwest, South and West, though the Midwest stood out as a relative bright spot, with single-family building permits up 2.9 percent even as sentiment fell nationally.

Housing Affordability Becomes a Political Flashpoint

Rising mortgage rates and still elevated home prices have placed housing affordability at the center of debate heading into the November 3 midterm elections, which determine control of Congress. President Trump earlier this year declined to sign a bipartisan housing affordability bill, calling it a big yawn, while pressing Congress, including resistant members of his own party, to first pass separate voting requirements legislation. Owens added that efforts by the Trump administration to advance regulatory reform are helping to ease some of the cost pressures builders face.

D.R. Horton and PulteGroup Lead Builder Declines

The sentiment data weighed directly on the largest publicly traded homebuilders Monday. D.R. Horton (NYSE:DHI), the largest US homebuilder by homes closed, fell 2.30 percent to USD 136.18, nearing its 12-month low, as the Arlington, Texas based company, led by Chief Executive Paul Romanowski and carrying a market Capitalization of about USD 38.1 billion, heads toward its next quarterly report. PulteGroup (NYSE:PHM) fell 1.63 percent to USD 111.70 ahead of its October 22 Earnings release, with the Atlanta based builder, led by Chief Executive Ryan Marshall, having reported about USD 17.3 billion in Revenue in 2025 on more than 29,500 home closings.

NVR and Toll Brothers Also Retreat

NVR (NYSE:NVR) dropped 1.42 percent to USD 5,835.78, trading below both its 50-day and 200-day moving averages and near its 12-month low, as the Reston, Virginia builder, led by Chief Executive Eugene Bredow, faces scrutiny over its land light model, which controls finished lots through option agreements rather than owning raw land, and a comparatively low inventory to Backlog ratio. Toll Brothers (NYSE:TOL), the country’s largest luxury homebuilder, fell 1.38 percent to USD 131.86, with the company, led by Chief Executive Karl Mistry and serving buyers at average selling prices above USD 1 million, seen by some as partly buffered from rate sensitive demand given its affluent customer base. All four builders are scheduled to report quarterly results within the coming weeks, starting with PulteGroup on October 22.

Lumber Prices Extend the Decline

The housing slowdown is also weighing on Commodity markets. Lumber futures fell below USD 527 per thousand board feet, retreating toward a two year low, as persistent weakness in new construction demand works through the supply chain. Trade tensions with Canada continue to complicate the picture: the US Department of Commerce lowered combined antidumping and countervailing duties on Canadian softwood lumber to 24.75 percent from 35.16 percent, but a separate 10 percent US Tariff brings total duties to 34.75 percent, limiting the potential for a meaningful supply recovery. A domestic lumber industry group backed the lower duty determination, while NAHB has called for a pause on building material tariffs to ease cost pressure on builders already absorbing higher financing and labor costs.

Housing and Lumber Metrics to Watch

Investors are tracking Tuesday’s housing starts and permits data, PulteGroup’s October 22 earnings report as the sector’s first look at the quarter, and whether the Canadian softwood lumber tariff dispute eases heading into the Federal Reserve’s policy decision later this month.