United States homebuilder sentiment rose slightly in March, though affordability concerns persisted amid high construction costs and economic stress stemming from the U.S.’ war against Iran.
Builder confidence in the market for single-family housing increased by one point to 38, per the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index. Reuters-polled economists had forecast the index would remain unchanged at 37.
“Affordability for buyers and builders remains a top concern,” said NAHB Chairman Bill Owens.
“Many buyers remain on the fence waiting for lower interest rates and due to economic uncertainty. Builders are facing elevated land, labor and construction costs and nearly two-thirds continue to offer sales incentives in a bid to firm up the market.”
Uncertainty from the U.S.’ war against Iran will also be headwinds in the market in the months ahead, including economic stress prompted by surging oil prices, said NAHB chief economist Robert Dietz.
The survey found that 37% of builders cut prices in March, a slight increase from 36% in February. The average price reduction was unchanged at 6%.
March’s indices come amid an uptick in mortgage rates. While the 30-year fixed mortgage rate averaged 6.05% in February, rates reached 6.41% last week, their highest level since September.
U.S. tariffs on furniture imports are also still in effect. Although the Supreme Court ruled many tariffs were unlawful last month, these furniture duties were imposed under a separate statute and were not affected by the decision.
The index rating current sales conditions rose one point to 42, and traffic of prospective buyers increased three points to 25. Sales expectations for the next six months were up two points to 49.
The U.S. Senate passed a bipartisan housing affordability package last week that would remove regulatory barriers to construction. The House of Representatives also passed a similar bill in February.
