The Biggest Challenges Expected by Home Builders in 2026
According to the latest NAHB/Wells Fargo Housing Market Index (HMI), 84% of home builders said that elevated mortgage rates was the most significant challenge builders faced in 2025, and 65% anticipate interest rates will remain a problem in 2026.
Other serious issues builders faced in 2025 include buyers expecting prices/interest rates to decline (81%), concern about employment/economic situation (65%), the cost/availability of developed lots (63%), and negative media reports making buyers cautious (62%). Home builders expect these challenges to persist in 2026.
A majority of home builders also reported facing serious problems in 2025 with cost/availability of labor (61%), rising inflation in the US economy (59%) gridlock/uncertainty in Washington (58%), impact/hook-up/inspection and other fees (57%), and local/state environmental regulations and policies (54%).
Looking ahead at 2026, fewer builders expect high interest rates (65%) and rising inflation in the US economy (46%) to be significant problems. On the other hand, builders don’t anticipate much change around labor shortages, uncertainty in Washington, fees, or local regulations.
Builders have been surveyed about their serious challenges every year since 2011. High interest rates have been deemed a serious problem for less than 10% of builders during most years, except for 2022 (66%), 2023 (90%), 2024 (91%) and 2025 (84%).
Until 2021, relatively few builders reported buyers expecting prices or interest rates to fall as a serious problem, but that issue’s share has been rising steadily for the past four years and reached a record high of 81% in 2025. In 2011, concern about employment/economic situation was a significant problem for 79% of builders. This concern faded over the next decade, and by 2021, only 24% cited it as a top issue. However, it has escalated rapidly since; in 2025, 65% of builders rated it a major challenge – the highest since 2012.
For more HMI insights, read this Eye on Housing post.