Homebuilder confidence hit 4-month high in October. Here's why.

According to the latest data from the National Association of Home Builders (NAHB), confidence among home builders rose to a four-month high in October. Jim Tobin, NAHB CEO, joins Wealth! to break down the state of the housing market and how the election may impact home builders.

Tobin explains that home builder confidence is up because of falling interest rates. He tells Yahoo Finance that the Federal Reserve's rate-cutting cycle "is really giving our members, and our survey members in particular, a feeling that we're on the backside of the bad news and that we are looking forward to a lower interest rate environment, certainly for mortgage rates in the future, and that the market is going to come back strong."

As the election looms ahead, Tobin explains, "I travel all over the country, talk to builders and homebuyers everywhere. And there really is this kind of constriction in the market because of the political environment right now. Knowing who's going to be at the top of the economy and what kind of philosophy is going to take hold as far as the next four years, I think has really kind of put people in a bit of a pause here, even though rates have fallen."

With so much uncertainty, he advises against waiting on the sidelines for Congress to act. While the Harris Campaign has promised incentives for both home buyers and builders, he explains that these plans will have to work their way through Congress, which could take a long time before coming into law.

He adds that both candidates see housing — particularly supply — as a top priority. He particularly likes policies focused on supply more than on prices, like measures such as rent control. "I think anything that suppresses prices artificially and gets federal intervention into the marketplace, that scares me," he says.

"I think overall, the fact that we've got both candidates talking about housing really earns them a lot of credibility in our builders' minds, and gives us opportunity that no matter who wins the white House, housing is going to be the top of their agenda," Tobin concludes.

To watch more expert insights and analysis on the latest market action, check out more Wealth here.

This post was written by Melanie Riehl

Video transcript

Home builders are feeling better.

Heading into 2025 confidence rose to a four month high in October.

According to a survey from the National Association of Home Builders, let's turn to Jim Tobin, who's the National Association of Home Builders, Ceo Jim, great to have you here, first and foremost, just take us into what's driving the home builder confidence right now as we did see it edge higher, I think the fall in interest rates.

Uh the Federal Reserve signaling that they are on a path to easing monetary policy, I think is, is really given our, our members and our survey members in particular a feeling that we are, we are on the back side of the bad news and that we are looking forward to a lower interest rate environment certainly for mortgage rates in the future and that the market is going to come back strong with that in mind and the market coming back strong for home builders.

It's really hinging on as well.

The type of incentives that might be put forward for a lot of the new home buyers that are trying to figure out the the best calculus around purchasing either an existing home or waiting for an existing home to come on the market or purchasing a new home and waiting for the build out there.

What is the calculus that you believe is being run?

And, and how much do you believe that new home buyers might even be waiting for after the election to see if that $25,000 that's promised by the Harris campaign comes to fruition.

Well, I, I think we have seen uh discounts by home builders uh as well as rate buy downs offered by homebuilders to get people from a mortgage rate in, in the low sixes where we're kind of hovering right now into the five.

We, we really think, you know, anything with a, a crooked number on, it really seems to be a driver for the marketplace.

So those, those incentives, uh especially those rate buy downs into the 5% range.

Uh really is what's what we're seeing new, new home builders uh offer to get people into product.

We still haven't seen the loosening in the existing market yet, but that's coming.

Uh We probably think that that, that comes into effect really in 2025 as rates continue to fall over the course of the next year.

Uh As far as waiting for the political, uh the political wins to uh to give us some uh some sort of certainty.

I think that is very much a part of the market.

I travel all over the country, talk to builders, uh and home buyers everywhere.

And, and there really is this kind of, uh, uh there's this constriction in the market because of the political environment right now, knowing who's going to be at the top of the, of the, of the economy and what, what kind of philosophy is gonna take, take, uh, take hold, uh, as far as the next four years, I think it's really kind of put people in a bit of a pause here even though rates have fallen as far as the incentives offered by the campaigns.

Sure, there are people that are gonna wait uh to see if uh we get it, we get down payment assistance, we get some new tax credits.

Uh my advice, anybody listening to this, who's thinking waiting on the sidelines for Congress to act, uh don't base your plans on whether Congress acts a lot of these proposals uh still be flushed out by the new administration as well as work their way through Congress.

So we're a long way from seeing those proposals actually become law and get into the marketplace.

You know, I, I wonder given the critical position that you hold in the consistent data that NAHB is able to publish as well as speaking to all of the different home builders out there.

You know, have you been able to speak to both campaigns and what have you heard?

And what, what grade would you give either the Trump campaign or the Harris campaign as they're trying to figure out what the reality of the home building environment looks like.

Post election.

I, I'd give them both a s uh to be completely honest with you.

I think the fact that the centerpiece of their economic pitch is housing and not just housing housing supply that is a critical, critical piece for us.

I've been waiting my entire career to have the top of the political tickets.

Talk about housing supply and, and both former President Trump and Vice President Harris are doing that and, and they conversations are trickling down into house and senate races as well as local races.

So housing really is at the forefront, not only of voters' minds but of the candidates themselves.

So I give them an a we can have a debate on, on the policies themselves.

I like the policies that talk about adding more supply.

So opening federal lands to potential development.

Uh I think is a really important piece that will add to supply.

Uh Vice President Harris's plan to offer credit for builders to build to the first time or first generation market.

I like that one a lot too.

I don't like rent control.

I think anything that suppresses prices artificially and gets federal intervention into the marketplace that scares me.

But I think overall the fact that we've got both candidates talking about housing really earns them a lot of credibility in our builders minds and gives us opportunity that no matter who wins.

The White House Housing is to be the top of their agenda.