US homebuilders and the polyvinyl chloride (PVC) producers that supply them are increasingly concerned that pent-up demand for new housing will not emerge this year amid continued weak demand, according to a new survey from the National Association of Home Builders (NAHB)
The NAHB/Wells Fargo Housing Market Index (HMI) decreased to 37 in January, further indicating bearish fundamentals for the domestic housing market, according to the HMI released late last week. The reading this month is down from 47 in January 2025 and off from 39 in December. The HMI is a weighted average of US homebuilders' views on present single-family home sales, expected sales in the next six months, and traffic of prospective buyers on a scale of 100. Readings above 50 indicate generally bullish sentiment.
Continued weakness in future sales expectations for the next six months as well as house-price cuts by builders contributed to ongoing bearish sentiment. About 40pc of homebuilders cut prices in January, with the average price decline at 6pc compared with December, NAHB said. A continued lack of consumer appetite slowed construction activity to five-year lows during the final months of 2025, data from the US Census Bureau shows.
Bearish signals in the US housing market are expected to prolong weakness in polyvinyl chloride (PVC) demand, a trend that defined 2025 for domestic producers. US producers are optimistic that potentially lower borrowing costs could bring consumers back to the market, as 30-year mortgage rates have fallen to 6.16pc in the week of 16 January, the lowest since September 2022, according to Mortgage Bankers Association data. Still, the US Federal Reserve has penciled in only one likely quarter point cut this year after making six rate cuts from a more than two-decade high in late 2024. Predictions for its rate-setting meeting next week point to no change to its target interest rate, according to the CME FedWatch tool.
