American homebuilders' confidence improved only slightly in August, and high construction and borrowing costs continued to weigh on the housing market. The overall housing market index rose 1 point to 35 this month, according to data released by the National Association of Home Builders and Wells Fargo Bank on Monday. An index below 50 means that more builders think the market is in poor condition than those that think it is in good condition, and the index has been below 50 since May 2024. “Our latest builder survey continues to show that the residential construction market is weak,” NAHB chief economist Robert Dietz said in a statement. “August was the 16th month in a row that at least 30% of builders said they would cut prices to support demand, and it was also the 16th month in a row that HMI fell below 40.” Among the sub-indicators, a current sales indicator rose 2 points to 39. Future sales expectations and potential buyer traffic indicators were the same as last month. The slump in builders' sentiment reflects the new housing market's reliance on various preferential measures and mortgage interest rate subsidies to stimulate demand. Contract interest rates for 30-year fixed-rate mortgages hovered below a one-year high, which was reached at the end of July. Builders have been attracting potential buyers through various concessions, which are eroding their profits; at the same time, rising fuel prices are driving up material costs. In August, 63% of builders said they used preferential sales measures, the same as last month. 35% of builders said price cuts, down from 37% in July.

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