Homebuilders in the United States have become less confident amid tariff concerns, elevated mortgage rates and high housing costs.
Builder confidence in the market for newly built single-family homes was the lowest in five months at just 42, dipping five points from January, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released today. The score is lower than economists' expectations of 46.
A reading under 50 reflects that builders view conditions as poor.
Uncertainty on the tariff front helped push builders’ expectations for future sales volume to drop to its lowest level since 2023.
“With 32% of appliances and 30% of softwood lumber coming from international trade, uncertainty over the scale and scope of tariffs has builders further concerned about costs,” NAHB chief economist Robert Dietz said.
While tariffs in Canada and Mexico are currently paused, U.S. President Donald Trump has proposed a 25% tariff on imports from both countries and a 10% tariff on all goods from China.
The HMI survey also found that 26% of builders cut home prices in February, down from 30% in January and the lowest share since May 2024. The average price drop in February was 5%, remaining the same as last month.
The use of sales incentives fell from 61% in January to 59% in February.
According to Newsweek, if Trump implements new tariffs, they could contribute to rising construction costs, slow down the housing market’s recovery and impact sectors reliant on real estate growth.