Survey: Elevated Mortgage Rates Remain Home Builders’ Primary Challenge

The nation’s home builders expect several significant challenges to persist into 2026, according to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index survey, with elevated mortgage rates remaining a top concern even as some pressures ease.

While the share of builders who see high interest rates as a serious problem is projected to drop from 84% in 2025 to 65% in 2026, it still ranks as the most widespread challenge facing the industry. Builders also cited buyer hesitancy — driven by expectations that prices or interest rates will fall if they wait — as a major issue, with roughly 81% flagging it as a problem in 2025 and significant shares expecting it to continue.

Economic uncertainty, including concerns about employment and the broader economy, also remains prominent, with 65% of builders identifying it as a serious problem in 2025. Issues related to the cost and limited availability of developed lots (63%) and negative media reports dampening buyer confidence (62%) round out the top tier of challenges.

Beyond demand-side pressures, builders are contending with persistent supply-side constraints. Roughly 61% reported significant problems with the cost or availability of labor, and more than half identified rising inflation, political gridlock in Washington, impact and inspection fees, and environmental regulations as serious obstacles in 2025. Builders surveyed expect little meaningful improvement in these areas for 2026.

Historically, high interest rates were rarely cited as a major issue by builders prior to 2022, but the recent tightening cycle has elevated financing costs to the forefront of industry concerns. Meanwhile, evolving patterns in buyer behavior and ongoing structural constraints highlight the multi-faceted challenges facing home building in the year ahead.