Willow and Hearth

35 is the new reading on the NAHB/Wells Fargo Housing Market Index for August 2026, up one point from July’s 34. It’s the first monthly gain the index has posted in some time, but it remains firmly in negative territory, marking the 16th straight month the reading has stayed below the 40-point threshold NAHB tracks as a marker of sustained weakness.

Key Points

• The Housing Market Index rose to 35 in August, up from 34 in July.
• The index has now spent 16 consecutive months below 40, ten points under the scale’s 50-point breakeven.
• The component measuring current sales conditions came in at 39, sales expectations for the next six months hit 43, and prospective buyer traffic sat at just 23.
• NAHB says affordability pressures, including mortgage rates and elevated construction costs, are driving the persistent weakness.
• Regional three-month averages show a wide split: the Midwest at 45 and Northeast at 44, versus the South at 31 and West at 27.

What the Index Actually Measures

The Housing Market Index is a monthly survey of single-family homebuilders, run jointly by NAHB and Wells Fargo, that scores builder perception of market conditions on a 0-to-100 scale. The breakeven point is 50: a reading above that means more builders view conditions as good than poor, and below it means the opposite. The overall figure blends three components: how builders rate current sales conditions, how they expect sales to look over the next six months, and how much traffic prospective buyers are generating at model homes and job sites. In August, that last figure was the weakest link at 23, a sign that fewer people are actually walking through new homes even as builders’ own expectations improved slightly.

That context matters more than the one-point uptick. At 35, the index sits ten points under the 40-line that has held for 16 consecutive months, a stretch NAHB Chief Economist Robert Dietz noted has also seen at least 30% of builders cutting prices monthly to move inventory. NAHB Chairman Bill Owens said builders “continue to contend with high construction costs and broader economic uncertainty,” per the association’s release. A single point of improvement doesn’t undo that run, especially with the 30-year fixed mortgage rate still averaging 6.65% in Freddie Mac’s latest weekly survey.

What It Means for Renovation Costs and Contractor Demand

For homeowners planning a remodel rather than new construction, sustained weak builder confidence can work in their favor on labor. When new-home starts slow, framers, roofers, electricians, and general contractors who might otherwise be booked on subdivisions often have more open calendars for remodeling jobs, which can translate into more competitive bids and shorter wait times. Material costs are a separate variable that doesn’t automatically follow builder sentiment down, though. NAHB cites elevated construction costs, not just labor, as a driver of the weak reading, so a homeowner negotiating a lower labor bid may still face sticker shock on materials.

The August reading suggests builders see the market as marginally less bad than it was, not good. Until the index climbs back toward the 50-point breakeven, the broader housing and renovation market is likely to keep behaving like a buyer’s, and negotiator’s, market on the construction-labor side.