US Homebuilder Sentiment Rebounds Despite Affordability Problems

Julia Fanzeres

Mon, May 18, 2026 at 10:00 AM EDT 2 min read

(Bloomberg) -- US homebuilder sentiment rebounded in May but remained low overall as affordability concerns continued to weigh on the outlook during the spring selling season.

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An index of market conditions from the National Association of Home Builders and Wells Fargo increased 3 points to 37, according to data published Monday. A value below 50 means more builders see conditions as poor than good.

“Recent increases for long-term interest rates will continue to hold back home buyer demand,” NAHB Chief Economist Robert Dietz said in a statement. “Although some regional markets, including parts of the Midwest, are showing relative strength, the housing market continues to face significant affordability challenges.”

Despite increased optimism, borrowing costs have climbed substantially since the beginning of the Iran war and persistent affordability constraints continue to sideline would-be homebuyers. Builders have had to respond by cutting prices and offering incentives, such as making upfront payments to lower customers’ mortgage rates.

In May, 32% of builders reported cutting prices, down from 36% in April. Some 61% of builders reported using sales incentives, marking the 14th consecutive month at least 60% have done so.

An index of sales expectations in the next six months increased three points to 45, remaining below the breakeven level of 50 for a fifth month. Its gauge of present sales increased 3 points to 40, and an index of prospective buyer traffic also rose.

In March, the Senate passed a housing package that includes restrictions on institutional investors buying single-family homes, though the bill has run into resistance in the House. President Donald Trump also signed two executive orders aimed at boosting housing affordability, including steps to ease mortgage regulations and roll back some environmental requirements tied to housing development.

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