NAHB/Wells Fargo Housing Market Index: Homebuilder sentiment improves in July

Homebuilder sentiment increased by one point in July to 33, matching the consensus, according to the NAHB/Wells Fargo Housing Market Index. The report highlights a modest improvement in the housing market, despite ongoing concerns about the economy and inflation.

Homebuilder sentiment in the United States has shown a slight improvement in July, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). The index rose by one point to 33, matching the consensus forecast [2]. This modest increase indicates a small but notable improvement in the housing market, despite ongoing economic concerns and inflationary pressures.

The NAHB/Wells Fargo HMI measures builder perceptions of current single-family home sales and sales expectations for the next six months. It also gauges the traffic of prospective buyers. In July, the index for current sales conditions rose by one point to 36, while the component measuring sales expectations for the next six months increased by three points to 43. The gauge charting traffic of prospective buyers posted a one-point decline to 20, the lowest reading since the end of 2022 [2].

The report highlights that while the housing market is showing signs of recovery, the sector remains weak. Elevated interest rates and economic uncertainty continue to act as headwinds. The passage of the One Big Beautiful Bill Act in July provided a boost to builder confidence, but the housing sector has weakened due to poor affordability conditions, particularly from elevated interest rates [2].

In the broader context, the NAHB/Westlake Royal Remodeling Market Index (RMI) also dipped in the second quarter of 2025, indicating a slowdown in remodeling activity, particularly in the West [1]. However, the NAHB still forecasts solid gains for remodeling spending in 2025, followed by more modest but still positive growth in 2026 [1].

Looking at regional sentiments, the Northeast and Midwest showed improvement, with the Northeast increasing to 45 and the Midwest holding steady at 41. The South and West, however, showed weakness, with the South dropping to 30 and the West declining to 25 [2].

Overall, the housing market continues to face challenges, but the slight improvement in homebuilder sentiment suggests that the sector may be slowly stabilizing. Investors and financial professionals should monitor these trends closely as they may indicate potential shifts in the market.

References:
[1] https://eyeonhousing.org/2025/07/remodeling-market-sentiment-dips-in-second-quarter/
[2] https://www.nahb.org/news-and-economics/press-releases/2025/07/builder-confidence-edges-up-in-july