HousingWireHousingWire
The relative calm in mortgage rates and trade policy isn’t giving homebuilders reason for optimism.
That’s evident in the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) in June, which shows a two-point drop from May to 32. It’s the lowest reading since hitting 31 in December 2022. Prior to that, the most recent readings below 32 were 30 in April 2020 and 29 in June 2012.
The survey polls builders on confidence in current conditions. An index of 50 or above means builder outlook is more positive than negative.
“Buyers are increasingly moving to the sidelines due to elevated mortgage rates and tariff and economic uncertainty,” said NAHB Chairman Buddy Hughes in a statement. “To help address affordability concerns and bring hesitant buyers off the fence, a growing number of builders are moving to cut prices.”
After dips at the beginning of the year, new-home sales have ticked up, rising 3.3% year over year in April. But markets in Texas and Florida — arguably the two most important for homebuilders — have been sluggish. The index in the South dropped to 30 in June, the lowest it’s been since June 2012 when it was 27.
Economic uncertainty — particularly around federal trade policy — is also weighing on the market. President Donald Trump’s tariff announcement on April 2 caused markets to crash and mortgage rates to pop back up to 7%.
Consumer confidence tanked along with it. With most of the tariffs on pause, consumers are feeling slightly more optimistic, but buyers are still hesitant to jump into the market despite rising inventory giving them more options and better leverage over sellers. Many sellers have given up on mortgage rates dropping and have listed their homes anyway.
“Rising inventory levels and prospective home buyers who are on hold waiting for affordability conditions to improve are resulting in weakening price growth in most markets and generating price declines for resales in a growing number of markets,” said NAHB Chief Economist Robert Dietz in a statement. “Given current market conditions, NAHB is forecasting a decline in single-family starts for 2025.”
