Builder mood subdued currently, more optimistic prospectively but with little foot traffic

The September NAHB home builder sentiment index rose to 41 from 39 but as expected and still remaining well below 50. Present conditions rose 1 pt to 45, still in contraction but the Future Outlook bounced above 50 to 53 from 49 likely due to hopes that the drop in mortgage rates will lift demand. However, buyer traffic remains punk with the Prospective Buyers Traffic component at just 27 vs 25 in August and 27 in July.

As to the lift in the outlook, the NAHB said “Thanks to lower interest rates, builders now have a positive view for future new home sales for the 1^st time since May 2024.” That said, keeping lid on the current mood, “the cost of construction remains elevated relative to household budgets, holding back some enthusiasm for current housing market conditions.”