Each month, NewHomeSource parent company Zonda surveys homebuilders to gauge sentiment about the housing market. The builder-focused insights reveal how the companies building homes feel about market sentiment and trends. For homeowners and prospective buyers, these insights can be a valuable tool to understand what is happening, what is coming in the housing market, and how to move forward.
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The main takeaways from the January report center on demand-side topics such as mortgage rates, financing incentives, and buyer confidence.
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Rates Retreat, Demand Returns
Just over half of the builders surveyed by Zonda reported that demand was on track with their expectations in January, double the share reporting such levels of demand in December and the highest share of “on track” responses since April 2024.
While this may be an indication that demand is returning in the new year, this may also reflect adjusted expectations. Since the “on track” metric has no quantitative association, it’s possible that builders are reporting demand is in line with lower expectations given current conditions.
One quarter of builders surveyed attributed the improvement to lower rates, up from 14% of builders a month ago. However, the pickup in traffic has been uneven: 16% of builders reported not change in traffic tied to rates while a quarter of respondents said buyers remain spooked by overall market conditions.
Incentives Still Reign Supreme
Four in five builders surveyed reported the use of mortgage rate buydowns in January, with 55% of builders offering buydowns in the 4% range. Another 20% of builder reported offering buydowns in the low- to mid-5% range.
The survey results show incentives are still an essential tool for builders in the current market. For buyers, this means there are plenty of deals out there that may help ease their economic uncertainty. For some, the difference between the average mortgage rate and the rate with a builder buydown may be enough to move them from the fence and fully into the housing market.
Buyer Confidence Remains a Challenge
Consumer confidence weighed on the housing market for much of 2025 and early indications are it remains a limiting factor early in 2026. It was cited as the primary holdup for buyers for the fourth consecutive month by builders surveyed by Zonda.
Beyond confidence, the labor market, affordability, and overall economic uncertainty are factors keeping buyers on the sidelines. While lower rates and buydowns can move some buyers off the sidelines, the survey reveals some confidence issues stem from issues separate from mortgage rates.
