Affordable affordability pressures hit the mid to low-end market, and confidence among US homebuilders continued to decline at the beginning of the year.

In early 2026, the confidence of American home builders continued to weaken, with the National Association of Home Builders (NAHB) Housing Market Index (HMI) falling 2 points to 37 in January from December the previous year, below the market's expectation of 40. The HMI, which is an important indicator of builders' views on current and future single-family home sales, has been below 50 for the 21st consecutive month, indicating an overall pessimistic outlook for the industry. Based on a monthly survey of approximately 900 builders, the NAHB Housing Market Index requires respondents to assess current new home sales, sales expectations for the next six months, and the traffic of potential buyers. The data shows that all three subcomponents of the January index, including current sales, future sales expectations for the next six months, and potential buyer traffic, have declined, reflecting continued weakness in demand. NAHB Chairman Buddy Hughes, a home builder and developer from Lexington, North Carolina, stated that while the high-end housing market remains relatively stable, affordability pressures are significantly impacting the middle and lower end markets. High home prices and mortgage rates are causing concerns for buyers, especially in the context of high house price-to-income ratios, making down payment pressures more pronounced. However, there have been some positive signs in terms of interest rates. NAHB Chief Economist Robert Dietz pointed out that according to Freddie Mac data, as of January 15, the average mortgage rate in the US had fallen to 6.06%, the lowest level in three years and nearly 100 basis points lower than the same period last year. This change is expected to alleviate some of the pressure on housing costs, but is not enough to reverse the overall market sentiment in the short term. Historically, the NAHB Housing Market Index, which has been in existence since 1985, has shown a strong correlation with consumer confidence indicators. The current index level, along with general consumer confidence indicators such as the University of Michigan Consumer Confidence Index and the Conference Board Consumer Confidence Index, indicates a simultaneous weakening of the housing market and overall consumer sentiment, highlighting the continued constraints of high interest rates and high home prices on the recovery of the US real estate market.