US: Housing Market Index

Highlights

The NAHB/Wells Fargo housing market index in March reflects improved builder sentiment with buyer traffic and expected sales higher now the mortgage interest rates have fallen close to 6 percent for a 30-year fixed rate mortgage. Nonetheless, the index remains substantially below the 50-mark that points to a solidly expanding housing market. Homebuyers still face affordability issues while prices remain elevated and supply restrained.

The Freddie Mac average monthly rate for a 30-year fixed rate mortgage declined steadily in the last few months and has leveled out just above the 6 percent mark. The monthly average for March to-date is 6.06 percent after 6.11 percent in January and February. Rates of around 6 percent should help motivate qualified homebuyers this spring. However, with mortgage rates probably not heading lower in the immediate future, home buying decisions will also depend on price and availability supply. Consumer confidence remains low and households are worried about job security in uncertain times. This will restrain homebuying for the time being.

The housing market index is up 1 point to 38 in March after 37 in February. The March reading is close to the consensus of 39 in the Econoday survey of forecasters. The slight shortfall is probably due to mortgage rates providing less support than expected.

The index for present sales of new single-family homes is up 1 point to 42 in March and has moved in a narrow range of 41-42 since November 2025. The index for expected sales is up 2 points to 49, little changed in the last three months. The index for buyer traffic rose 3 points to 25 in March. Some of this may be as March brings warmer weather and potential home buyers are more inclined to shop for a home.

Somewhat fewer homebuilders are offering incentives at 64 percent in March after 65 percent in January and February. The percentage is the lowest since 62 percent in July 2025. Among homebuilders, 37 percent offered a price cut after 36 percent in February and 40 percent in December 2025 and January 2026. The average size of a price cut is 6 percent in January, February, and March.

Market Consensus Before Announcement

Not much recovery expected in homebuilder sentiment with the index nearly flat at 37 from very weak 36 a month ago.

Definition

The housing market index is a monthly composite that tracks home builder assessments of present and future sales as well as buyer traffic. The index is a weighted average of separate diffusion indexes: present sales of new homes, sales of new homes expected in the next six months, and traffic of prospective buyers of new homes.

Description

This report provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as the housing market index, investors can gain specific investment ideas as well as broad guidance for managing a portfolio. Whether the housing market index reflects new home sales or home resales, once a home is sold, it generates revenues for the realtor and the builder. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items home buyers might purchase. The economic"ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month. Since the economic backdrop is the most pervasive influence on financial markets, home sales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the existing home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.

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