NAHB Calls for Rate Cuts Amid US Homebuilder Sentiment Decline

The NAHB has urged the Fed to lower interest rates to improve housing affordability, citing a decline in the NAHB/Wells Fargo Housing Market Index to its lowest level since December 2022. The Fed has kept the federal funds rate steady this year, impacting housing affordability through higher mortgage rates. NAHB Chief Economist Robert Dietz suggests lowering the federal funds rate to reduce financing costs for housing construction and indirectly help mortgage interest rates.

The National Association of Home Builders (NAHB) has called on the Federal Reserve (Fed) to lower interest rates to improve housing affordability. The NAHB/Wells Fargo Housing Market Index (HMI) for August 2025 reached its lowest level since December 2022, reflecting ongoing challenges in the housing market [1].

The NAHB's Chairman, Buddy Hughes, and Chief Economist, Robert Dietz, highlighted that affordability remains the top challenge. They attributed the decline in builder confidence to elevated mortgage rates, weak buyer traffic, and persistent supply-side issues, including regulatory hurdles [1]. The HMI index for current sales conditions fell to 35 in August, while sales expectations for the next six months held steady at 43 [1].

Dietz suggested that lowering the federal funds rate would reduce financing costs for housing construction and indirectly help mortgage interest rates, thereby improving housing affordability [1]. Despite the Fed keeping the federal funds rate steady this year, the NAHB's plea underscores the importance of monetary policy in addressing housing market challenges.

Warren Buffett's Berkshire Hathaway has also demonstrated confidence in the housing sector by doubling down on its investments in homebuilders and building supply firms. Berkshire Hathaway increased its holdings in Pool Corp., DR Horton, Lennar Corp., Nucor Corp., and Allegion PLC by triple digits, indicating a strong conviction in the sector [2].

These investments come as the spread between U.S. home sellers and buyers is the largest in a decade, and mortgage rates have fallen to their lowest level in 10 months [2]. The strategic shift into real assets by Berkshire Hathaway, a net seller for 11 consecutive quarters, suggests a response to the current economic climate.

The NAHB's call for lower interest rates and Berkshire Hathaway's increased investments highlight the importance of monetary policy and investor sentiment in the housing market. As the housing market continues to face challenges, the Fed's response to the NAHB's plea will be closely watched by investors and financial professionals.

References:
[1] https://www.nahb.org/news-and-economics/press-releases/2025/08/builder-confidence-plateaus-at-relatively-low-level
[2] https://www.ainvest.com/news/warren-buffett-doubles-housing-market-triple-digit-increase-homebuilder-building-supply-firms-holdings-2508/