The National Association of Home Builders (NAHB) Housing Market Index, which is a near real-time read on builder confidence, fell 5 points to 33 in November. All components of the index moved lower, with current sales conditions falling six points to 39, sales expectations for the next six months declining four points to 31 and buyer traffic dropping five points to 20.

What’s the bottom line? Any reading above 50 on this index, which runs from 0 to 100, signals expansion while readings below 50 signal contraction. This month’s confidence reading is the lowest since June 2012 (except for the start of the pandemic in the spring of 2020), which is unsurprising given that building material costs remain elevated while higher interest rates have caused many homebuyers to pause their search.

The NAHB also noted that 59% of builders reported using incentives to help increase buyer traffic, with “a big increase in usage from September to November.” For example, 25% of builders said they are paying points for buyers in November as compared to 13% in September. Mortgage rate buy-downs rose from 19% to 27% over the same time period, while 37% of builders cut prices in November versus just 26% in September.