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Homebuilder confidence was flat in December from the previous month and came in lower than analyst estimates amid uncertainty over how quickly mortgage rates will decline.

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index stayed at 46 in December, lower than economists’ estimates of 47, per Bloomberg data.

Any reading under 50 indicates more builders view conditions as poor rather than good.

“While builders are expressing concerns that high interest rates, elevated construction costs and a lack of buildable lots continue to act as headwinds, they are also anticipating future regulatory relief in the aftermath of the election,” NAHB chairman Carl Harris, a custom home builder from Wichita, Kan., said in a press statement. “This is reflected in the fact that future sales expectations have increased to a nearly three-year high.”

Mortgage rates have dropped for the last three consecutive weeks, with the average 30-year mortgage rate holding at 6.6%, according to Freddie Mac.

There’s a growing expectation that the Federal Reserve will cut the federal funds rate by 25 basis points at the conclusion of its meeting on Wednesday. The decrease has already been baked into current mortgage interest rates, so housing experts don’t expect mortgage rates to drop further.

NAHB chief economist Robert Dietz wrote, “Concerns over inflation risks in 2025 will keep long-term interest rates, like mortgage rates, near current levels with mortgage rates remaining above 6%.”