Welcome back to KPA Wealth. — Today we talk about how the new builder NAHB/Wells Fargo Housing Market Index

• Builder Confidence Gets a Nudge—But Buyers Still on the Fence

• Today’s Mortgage Rates

Builder Confidence Gets a Nudge—But Buyers Still on the Fence

The NAHB/Wells Fargo Housing Market Index (HMI) for July rose slightly to 33, up from June’s 32—but still far below the threshold of 50, which signals optimism. It’s a small improvement, yet the market sentiment remains deeply pessimistic for the 15th straight month. Compared to historical lows—30 in April 2020 and 29 in June 2012—this figure is barely above rock bottom.

So, what’s really going on in the housing sector? The short answer: affordability and uncertainty. According to the NAHB, the housing market has struggled throughout 2025 due to elevated mortgage rates and rising construction costs. Builders continue to deal with weakened demand, and even recent legislative wins haven't sparked a turnaround.

One factor that’s made waves recently is the passage of the One Big Beautiful Bill Act. NAHB Chairman Buddy Hughes called it a victory for builders and small businesses, and there's hope it could give the economy a shot of momentum. But the broader housing picture remains dim. Homebuyers are still grappling with mortgage rates hovering around 7%, making monthly payments unaffordable for many. The result? Less foot traffic at new-home developments and fewer signed contracts.

The housing index's subcomponents offer more context: Builders’ views of current sales conditions and their six-month outlooks both ticked upward. But their rating of buyer traffic dipped further, now at its lowest in nearly two years. It's a telling detail—builders might feel hopeful, but buyers are clearly hesitant.

Why aren’t buyers biting? Beyond high borrowing costs, there's the issue of price. Builders are pulling every lever to keep deals alive. In July, nearly 40% of them cut prices—mostly around 5%. Others are sweetening the pot with mortgage buydowns, closing cost help, or fancy upgrades. These are big moves, especially in a high-cost construction environment.

But it’s not just affordability. The global trade situation has injected fresh uncertainty into the market. The Trump administration’s announcement of a new worldwide tariff regime startled many, sending raw material costs into question. While implementation was delayed to August, the mere threat of tariffs on vital materials like steel, lumber, and copper has left many builders cautious. These inputs form the literal foundation of construction—when they get pricier or harder to source, it squeezes already-thin margins.

For context, even in stronger regions, builder sentiment remains fragile. Some builders in hot markets like Florida report offering what they call “outrageous incentives” just to draw traffic. That language says it all: they’re working harder than ever to secure each buyer.

NAHB Chief Economist Robert Dietz also warns of more trouble ahead. He expects a drop in single-family housing starts this year, driven by high costs and falling demand. Permits are down by 6% year-to-date, further signaling hesitation in new builds.

What does all of this mean for everyday homebuyers and sellers? In my view, it’s a market in limbo. Builders are adjusting quickly—lowering prices, offering deals—but broader affordability remains a stubborn obstacle. And while some legislative measures might help long-term, they’re unlikely to move the needle in the next few months.

Is the real problem deeper? Are new homes just not built the same anymore. I think so.

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Kyle Allgair
CEO of KPA Wealth
📞 (279) 977-8149 | ✉️ [email protected]
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Kyle Allgair is the CEO of KPA Wealth, and is continuously helping clients build wealth through real estate and strategic financial planning. Contact him for personalized advice on achieving your financial goals.