US Homebuilder Sentiment Falls to 29 in October as Mortgage Rates Exceed 7%

October data showed all three HMI components declining, with current sales at 33, future expectations at 32, and buyer traffic at 18. Forty-three percent of builders reported price cuts averaging 6 percent, while 65 percent offered incentives for the 19th consecutive month. Regional three-month averages fell across the Northeast to 38, Midwest to 40, South to 30, and West to 26.

Primary records from NAHB surveys tie the decline to mortgage rates above 7 percent, elevated material and energy costs, and reported immigration enforcement that delayed projects in more than one-third of markets. These constraints align with documented gaps between current 7.5 percent rates and the 4.33 percent average on existing mortgages, which reduce seller listings and buyer traffic.

Policy signals under the current administration on regulatory reform have not offset the combined effect of financing costs and labor availability. Builders have responded by limiting new starts rather than expanding supply.

Next data releases will test whether buyer traffic stabilizes below 20 or if further rate persistence forces additional incentive reliance through year-end.