US home builders have the blues but luxury housing remains a bright spot in challenging economy

American home builders are more pessimistic than they’ve been in years about the housing market, but luxury housing is a bright spot in the economy.An index of builder confidence in the market for newly built single-family housing dropped to its lowest level in 14 years, according to data the National Association of Home Builders and Wells Fargo released Monday.The index dropped three points to 29 last month — the lowest level since June 2012.Experts blamed factors from high mortgage rates and inflation to a challenging labor market for the house builders’ doldrums.“The housing market is being squeezed by higher mortgage rates and an overall higher cost of living for prospective buyers, just as we enter the seasonally slower time of year for home sales,” Ali Wolf, a chief economist at housing data firm Zonda, told the Post. Home sale prices across the country have been rising.Housing prices rose 2.1% from the second quarter of 2025 to the second quarter of this year, according to the Federal Housing Financial Agency.

With mortgage rates passing 7% in recent weeks, buyer traffic has been at a 14-year low even though there is large demand for housing. “Higher mortgage rates, elevated construction costs and weaker consumer confidence are keeping more buyers on the sidelines,” said Robert Dietz, chief economist of the National Association of Home Builders in a statement.“As a result, buyer traffic has fallen to its lowest level since April 2012, excluding the pandemic’s onset in April 2020.”Home builders are slashing rates to bring in buyers — over four in 10 builders lowered prices last month, according to the survey from the National Association of Home Builders, whose members build about 80% of new homes in the States.“Builders have to find ways to keep homes selling.

That typically comes in the form of price cuts and/or incentives,” Wolf said.Things are a bit better in the Midwest, where single-family building permits are up 2.9% so far...