Amid tariff ambiguity, builder sentiment sinks
According to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), a confluence of factors are squeezing builders from all sides. Economic angst, the looming specter of tariffs and sky-high construction costs have been the key culprits in dragging builder sentiment downward in March. In fact, builder confidence in the market for newly built single-family homes was 39 in March, down three points from February and the lowest level in seven months.
However, builders are expressing hope that a streamlined regulatory environment will improve the overall business climate.
“Builders continue to face elevated building material costs that are exacerbated by tariff issues, as well as other supply-side challenges that include labor and lot shortages,” said NAHB Chairman Buddy Hughes, a home builder and developer from Lexington, N.C. “At the same time, builders are starting to see relief on the regulatory front to bend the rising cost curve, as demonstrated by the Trump administration's pause of the 2021 IECC building code requirement and move to implement the regulatory definition of ‘waters of the United States’ under the Clean Water Act consistent with the U.S. Supreme Court’s Sackett decision.”
“Construction firms are facing added cost pressures from tariffs,” said NAHB Chief Economist Robert Dietz. “Data from the HMI March survey reveals that builders estimate a typical cost effect from recent tariff actions at $9,200 per home. Uncertainty on policy is also having a negative impact on home buyers and development decisions.”
The latest HMI survey also shows that 29 percent of builders slashed home prices in March, which is up from 26 percent in February. The use of sales incentives was 59 percent in March, unchanged from February.
The HMI index gauging current sales conditions dropped three points to 43 in March, its lowest point since December 2023. The gauge charting traffic of prospective buyers dropped five points to 24 while the component measuring sales expectations in the next six months held steady at 47.
Looking at the HMI's three-month moving averages for regional HMI scores, the Northeast fell three points in March to 54, the Midwest moved three points lower to 42, the South dropped four points to 42 and the West posted a two-point decline to 37.
Get more HMI data here.
