Survey: Tariffs clouding builder outlook
According to the April 2025 National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), tariff concerns and elevated building material costs are the two-headed monster conspiring to quash builder sentiment right now.
Despite a bit of silver lining with a recent dip in mortgage interest rates, there's just no telling what the next months will hold in terms of policy decisions. And that ongoing ambiguity is starting to erode confidence during what's typically the busiest building time of year.
“The recent dip in mortgage rates may have pushed some buyers off the fence in March, helping builders with sales activity,” said NAHB Chairman Buddy Hughes, a home builder and developer from Lexington, N.C. “At the same time, builders have expressed growing uncertainty over market conditions as tariffs have increased price volatility for building materials at a time when the industry continues to grapple with labor shortages and a lack of buildable lots.”
“Policy uncertainty is having a negative impact on home builders, making it difficult for them to accurately price homes and make critical business decisions,” said NAHB Chief Economist Robert Dietz. “The April HMI data indicates that the tariff cost effect is already taking hold, with the majority of builders reporting cost increases on building materials due to tariffs.”
Tariffs already affecting prices, tactics
When NAHB asked its respondents about the impact of tariffs on their business, 60 percent of builders reported their suppliers have already increased or announced increases of material prices due to the looming levies. On average, per NAHB, suppliers have already increased their prices by 6.3 percent in response to announced, enacted or expected tariffs. This means builders estimate a typical cost effect from recent tariff actions at $10,900 per home.
The April 2025 HMI survey also found that 29 percent of builders surveyed cut home prices in April, which is the same number from March. Meanwhile, the average price reduction reported by respondents was 5 percent in April (also the same rate as March). The use of sales incentives to move inventory was 61 percent in April, up from 59 percent in March.
Looking at the three-month moving averages for regional HMI scores, each region dipped. The Northeast fell seven points in April to 47, the Midwest moved one point lower to 41, the South dropped three points to 39, and the West posted a two-point decline to 35.
HMI tables can be found here.
