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, according to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).
“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 Buddy Hughes, chairman of NAHB. “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 Robert Dietz, chief economist for NAHB. “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 revealed that 29 percent of builders cut home prices in March, up from 26 percent in February. Meanwhile, the average price reduction was 5 percent in March, the same rate as the previous month. The use of sales incentives was 59 percent in March, unchanged from February.
Derived from a monthly survey that NAHB has been conducting for more than 35 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.