The index
The NAHB/Wells Fargo Housing Market Index rose one point to 35 in August, up from 34 in July, against a consensus forecast of 33 and above the year-earlier reading of 32. The current sales conditions component rose two points to 39, a three-month high, while the six-month sales expectations component held at 43 and prospective buyer traffic held at 23.
August marked the sixteenth consecutive month the headline index has stayed below 40, the longest such stretch since 2012, and it remains well under the long-run average of 46 and far below the record high of 90 reached in November 2020. The index had stood at 37 as recently as May.
Pricing behavior among builders
Thirty-five percent of builders reported cutting prices in August, down from 37% in July and level with June, with an average price reduction of 6%, matching July's rate. Sixty-three percent of builders used sales incentives other than price cuts, the seventeenth straight month that figure has stayed above 60%. August was also the sixteenth consecutive month with at least 30% of builders cutting prices.
The new-home sales backdrop
The builder-sentiment reading arrived three weeks after the Census Bureau and HUD's joint report on new residential sales for July, which showed sales of new single-family houses at a seasonally adjusted annual rate of 607,000, down 10.5% from June's revised 678,000 and 6.3% below the July 2025 rate of 648,000. Census flagged both changes as not statistically significant, with 90% confidence intervals of ±14.0 and ±19.6 percentage points respectively.
New houses for sale stood at a seasonally adjusted 488,000 at the end of July, up 1.9% from June, a supply of 9.6 months at the current sales pace. Of that inventory, 115,000 homes had not yet started construction, 256,000 were under construction and 117,000 were completed and standing unsold — the last group being the segment carrying the most holding cost and the most likely candidate for the discounting NAHB's survey describes. The median new-home sales price fell to $393,800 in July, down 2.3% from June and 0.9% from a year earlier.
Regionally, Census data showed new-home sales down 42.7% month over month in the Midwest to a 43,000 annual rate, the only regional move Census judged statistically significant, against a 13.0% South decline to 383,000 and a 6.2% West increase to 138,000.
A regional split in builder sentiment
NAHB Chairman Bill Owens, a builder and remodeler from Worthington, Ohio, pointed to a Midwest bright spot even as the region's new-home sales fell sharply in the Census data: he said new-home sales in the Midwest were running more than 2% above year-ago levels through the first seven months of 2026, a full-year comparison distinct from the single-month Census figure above. Owens also cited rising gasoline and diesel prices as pushing up builder material costs and said spec-home building remained weak as buyers stayed on the sidelines.
The single national HMI figure also masks a regional split: sentiment improved in the Northeast, South and West in August but was unchanged in the Midwest, according to the survey's regional breakdown.
Reading the two releases together
The HMI is a survey of builder sentiment; the Census new-residential-sales report is a count of transactions and inventory. Taken together, they describe a market where builders' own assessment of current conditions improved modestly in August even as the most recent hard sales data, covering July, showed activity slowing and unsold completed inventory continuing to accumulate. The one-month lag between the two releases, and the fact that HMI is forward-looking sentiment while the Census figures are actuals, means the two need not move together, and in this instance they did not.