43% of builders cut prices in October as confidence fell to a 14-year low
The NAHB/Wells Fargo index dropped to 29 and buyer traffic sank to 18, so buyers can shop builders against each other while sellers of finished lots still have room to hold firm on terms.
By Katia Clara · · 3 min read
Builder confidence fell to 29 in October, down three points and the lowest since June 2012, according to the NAHB/Wells Fargo Housing Market Index [1].
The share of builders cutting prices rose to 43%, from 38% in September and 35% in August [1][2].
Buyer traffic fell to its lowest reading since 2012
The traffic gauge dropped to 18, its lowest since April 2012 if April 2020 is set aside [1]. Expectations for sales over the next six months fell five points to 32 [1].
The West and South scored lowest
| Region | October, three-month average | Change from prior month |
|---|---|---|
| Midwest | 40 | −3 |
| Northeast | 38 | −1 |
| South | 30 | −1 |
| West | 26 | −2 |
Rates rose through September and eased only slightly in October
NAHB said buyer traffic weakened “largely because of rising mortgage rates” [2]. The 10-year Treasury yield climbed from 4.78% in early September to 5.28% on Oct. 2 before settling at 4.94% on Oct. 30 [4]. Freddie Mac’s 30-year average was 7.24% for the week of Oct. 29 [3].
Public builders reported the same pressure on prices
Lennar put its incentives at about 12.0% in the quarter that ended Aug. 31 [5]. Green Brick Partners said incentives on new orders were “elevated at 11%” in the September quarter, even with a 28.0% gross margin [6].
NAHB also found that more than one-third of builders saw immigration enforcement activity in their markets during the past month [1].
How to use this
For buyers of new homes
- Get written offers from at least two builders in the same area. With 43% of builders cutting prices [1], the first quote from a sales office may not be the lowest one available.
- Ask for the cut and the incentive together. The average cut was 6% [1], which we calculate at $24,000 on a $400,000 home, and 65% of builders also offered sales incentives [1]. Ask for both in the same written offer.
For land and lot sellers
- Price finished lots with the supply data in hand. In September, 42% of builders called lot availability poor and 38% called it fair [2].
- Ask for a faster takedown schedule in the Midwest and Northeast, where the three-month averages of 40 and 38 were the highest of the four regions [1]. In the West, at 26 [1], expect builders to ask for longer option periods, and price the extra time into the deposit.
For investors and lenders
- Use the traffic gauge as an early read on orders. At 18 [1], it sits well below the current sales reading of 33, which suggests fewer buyers in models ahead of the next round of contracts.
- Stress-test Western land and construction loans first. The West’s average of 26 is the lowest of the four regions [1].
- Read each builder’s incentive disclosure against the survey. Lennar’s roughly 12% [5] and Green Brick’s 11% on new orders [6] show what a public builder spends to keep sales moving while 65% of all builders surveyed use incentives [1].
This is market commentary, not investment advice.
Sources
- [1]National Association of Home Builders, Builder sentiment falls to 14-year low on rising affordability concerns (NAHB/Wells Fargo Housing Market Index, October 2026), Oct 19, 2026.
- [2]National Association of Home Builders, Builder sentiment falls on higher interest rates and costs (NAHB/Wells Fargo Housing Market Index, September 2026), Sep 16, 2026.
- [3]Freddie Mac, Primary Mortgage Market Survey, week of Oct. 29, 2026, Oct 29, 2026.
- [4]U.S. Department of the Treasury, Daily Treasury par yield curve rates, 10-year, last trading day of each week, Oct 30, 2026.
- [5]Lennar Corporation, Lennar reports third quarter 2026 results (SEC Form 8-K, Exhibit 99.1), Sep 16, 2026.
- [6]Green Brick Partners, Inc., Green Brick Partners reports third quarter 2026 results (SEC Form 8-K, Exhibit 99), Oct 28, 2026.
