Homebuilder sentiment in the US is stuck in the dumps.

Sorry. Let me rephrase. Builder confidence has “plateaued at a relatively low level.” That’s how the NAHB described the situation on Monday, in the first of this week’s sparse US macro data.

At 32, the NAHB headline remains a mile below the threshold separating net optimism from pessimism.

As the figure reminds you, builders spent the last three years suffering from chronic depression. The color accompanying Monday’s release suggested little in the way of respite.

All the usual factors conspired to perpetuate the gloom: High mortgage rates, subdued foot traffic from forlorn buyers fed up by now trying to make the math work and, of course, “ongoing supply-side challenges.” The last time sentiment was net positive was April of 2024, and then just barely.

As discussed here late last week, this isn’t really a Fed problem. Donald Trump pretends it is, but Jerome Powell can’t cut mortgage rates. And if outsized reductions to the funds rate raise policy profligacy concerns, rate cuts could actually make the problem worse for homebuyers if the specter of lost Fed independence puts a floor under longer-end Treasury yields.

“Affordability continues to be the top challenge for the housing market and buyers are waiting for mortgage rates to drop to move forward,” NAHB Chairman Buddy Hughes sighed.

It’s worth noting that with last week’s decline — 10bps, the largest since March — the average 30-year fixed is the lowest since early April at 6.67%.

That was enough to spur a wave of refis, but not enough to coax buyers off the sidelines. Purchase apps rose just 1% in the week to last Wednesday. (The MBA’s gauge was up 17% versus the same week a year ago.)

“Housing affordability is central to the outlook for economic growth and inflation,” NAHB Chief Economist Robert Dietz said Monday.

In his analysis, Dietz suggested Powell could help homebuyers in a roundabout way — namely by making it cheaper for builders to borrow. A lower funds rate would “reduce financing costs for housing construction and indirectly help mortgage rates,” he mused.

Fully two-thirds of builders reported using sales incentives in August, the highest share of the post-pandemic era.