Builder confidence continues to waver in June as the latest numbers hit historical lows, according to the latest data from the National Association of Home Builders (NAHB).
The latest NAHB and Wells Fargo Housing Market Index (HMI) indicated that builder confidence was at 32 (out of 100), down two points from May’s reading of 34. NAHB noted in the report that levels this low have only been seen twice since 2012: once in December 2022 when it hit 31 and once in April 2020 at the start of the pandemic when it hit 30.
“Buyers are increasingly moving to the sidelines due to elevated mortgage rates and tariff and economic uncertainty,” said NAHB Chairman Buddy Hughes. “To help address affordability concerns and bring hesitant buyers off the fence, a growing number of builders are moving to cut prices.”
While many tariffs threatened by the Trump administration remain paused, experts say that even the threat of new levies, or on-again-off-again import dues, will affect builders. Both tariffs and the overall economic uncertainty this year have also been cited by consumers in surveys tracking sharp drops in sentiment.
All three indices of the HMI report saw drops in June as well. Current sales conditions fell two points to 35, sales expectations in the next six months fell two points to 40, and traffic of prospective buyers fell two points to 21. The traffic reading has also now hit the lowest level seen since November 2023.
With confidence falling, the amount of builders cutting prices grew to 37%, which is the highest percentage since NAHB began tracking this figure on a monthly basis in 2022. This is also up from 34% in May and 29% in April. The use of sales incentives was 62%, up one percentage point from May. Meanwhile, the average price reduction was 5% in June, the same it’s been since last November.
“Rising inventory levels and prospective homebuyers who are on hold waiting for affordability conditions to improve are resulting in weakening price growth in most markets and generating price declines for resales in a growing number of markets,” said NAHB Chief Economist Robert Dietz. “Given current market conditions, NAHB is forecasting a decline in single-family starts for 2025.”
Looking at the three-month moving averages for regional HMI scores, the Northeast fell one point to 43, the Midwest grew one point to 41, the South fell three points to 33 and the West fell four points to 28.
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