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Builder sentiment indexes turn builders’ survey responses into a snapshot of how they view housing demand and near-term conditions. The clearest example is the NAHB/Wells Fargo Housing Market Index (HMI), a monthly 0–100 measure focused on newly built, single-family homes in the United States. Investors can use its direction and components as context—not as a direct measure of home sales, prices, or likely investment returns.
What the NAHB Housing Market Index measures
The National Association of Home Builders (NAHB) and Wells Fargo produce the HMI from a monthly survey of single-family homebuilders. It asks builders about three things: current sales of new single-family homes, expected sales over the next six months, and traffic of prospective buyers. NAHB describes the index as a way to track the pulse of the single-family housing market. NAHB’s HMI methodology and release page explains its scope and interpretation.
The HMI is a sentiment index, not a tally of transactions or construction. It does not directly measure home prices, existing-home activity, remodeling, rents, or all residential building. NAHB publishes separate measures for other segments, including the Remodeling Market Index, Multifamily Market Survey, and Home Building Geography Index. NAHB’s index directory lists these measures and their stated scopes.
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How the composite is calculated
The three component indexes are combined using published weights. Builders rate current and expected sales as good, fair, or poor; they rate prospective-buyer traffic from high or very high to low or very low. For the sales questions, NAHB calculates an index by taking the percentage of positive responses minus the percentage of negative responses, adding 100, and dividing by two; traffic uses the equivalent high-versus-low calculation.
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| Component | What builders assess | Weight |
|---|---|---|
| Present sales | Current sales of new single-family homes | 0.5920 |
| Expected sales | Sales over the next six months | 0.1358 |
| Buyer traffic | Traffic of prospective buyers | 0.2722 |
NAHB says the builder panel is stratified by region and builder size and refreshed annually. A composite can obscure different signals: current sales might be weak while expectations are improving, or buyer traffic may lag the other components. Reading the three readings alongside the headline helps show which part of builders’ outlook is changing. NAHB’s methodology page provides the weights, formulas, and panel description.
How to interpret a reading
A reading above 50 means more builders report confidence about current and near-term housing conditions than report otherwise. The scale runs from 0 to 100. A rising reading indicates improving reported sentiment relative to earlier readings; a falling reading indicates worsening sentiment. Neither movement, on its own, establishes what will happen to homebuilder stocks, house prices, or the wider economy.
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How investors can use builder sentiment
- Check the level and direction. Put the latest reading beside prior months and note whether sentiment is improving, deteriorating, or relatively steady. A single reading is less informative than a trend.
- Inspect the components. Compare current sales, six-month sales expectations, and prospective-buyer traffic. Diverging components can reveal a mixed outlook that the composite alone hides.
- Cross-check with other evidence. Compare the survey with housing starts, new-home sales, mortgage conditions, affordability, employment, and building costs. Interest rates, employment, material costs, and inflation can all affect builder sentiment, according to NAHB.
- Keep the segment in view. The HMI concerns new single-family demand in the United States. Do not treat it as a proxy for existing-home transactions, multifamily construction, remodeling, rents, or housing affordability.
- Separate a useful relationship from a trading signal. NAHB reports that a 1994 peer-reviewed study by Federal Reserve Board research economist John Goodman found the HMI significantly helped predict housing-market variables such as starts among the attitude surveys considered. NAHB says its later reassessment found essentially similar predictive ability. This historical evidence does not guarantee a lead in every cycle, establish current predictive accuracy, or demonstrate that an HMI-based strategy earns investment returns. NAHB’s HMI page discusses the validation history.
What the September 2026 reading showed
In its September 2026 release, NAHB reported an HMI of 32, down three points. The component readings were 35 for current sales, 37 for expected sales over the next six months, and 23 for prospective-buyer traffic. These are dated monthly readings, not permanent characteristics of the index.
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NAHB also reported that 38% of builders cut prices in September 2026, with an average reduction of 6%, and that 66% used sales incentives. These figures describe builder-reported pricing actions and incentives for that month; they are not measures of nationwide home-price changes. Check the latest NAHB release before relying on a monthly value, since subsequent releases can change the picture.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How the HMI compares with other housing measures
Housing indexes can sound similar while measuring different populations or inputs. When comparing them, identify who responds or what data are collected, which housing segment is covered, how often the measure is produced, and whether it is a survey index or a composite of observed market data.
| Measure | Input and scope described in the cited source | How it differs from HMI |
|---|---|---|
| NAHB/Wells Fargo HMI | Monthly builder survey about new single-family sales, six-month sales expectations, and prospective-buyer traffic in the United States. | Builder sentiment focused on new single-family housing. |
| REALTORS® Confidence Index | Member survey measures, as described in a historical Fannie Mae paper. | Survey respondents and coverage differ from the HMI; the paper does not establish the current form or availability of every series. |
| Freddie Mac Multi-Indicator Market Index (MiMi) | A composite of market data, as described in the historical paper. | Market-data composite rather than a builder survey; the paper is not confirmation of its present status. |
| Pulsenomics/Zillow Housing Confidence Index | Consumer survey with market, expectations, and homeownership-attitude sub-indexes, as described in the historical paper. | Consumer sentiment rather than builders’ assessment; current form and availability are not established by that historical description. |
The historical comparison is from Fannie Mae’s Building a Home Purchase Sentiment Index. Treat it as a description of measures in that paper, not as confirmation that each series remains available or unchanged today.
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