The latest Housing Market Index (HMI) from the National Association of Home Builders (NAHB) and Wells Fargo shows economic uncertainty from tariff concerns and elevated building material costs kept builder sentiment in negative territory in April, despite a modest bump in confidence happened, likely due to a slight retreat in mortgage interest rates in recent weeks.
Builder confidence in the market for newly built single-family homes was 40 (out of 100) in April, edging up one point from March, according to the report, released today.
“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 homebuilder and developer from Lexington, North Carolina. “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 homebuilders, 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.”
According to the report, when asked about the impact of tariffs on their business, 60% of builders reported their suppliers have already increased or announced increases of material prices due to tariffs. On average, suppliers have increased their prices by 6.3% in response to announced, enacted or expected tariffs, NAHB said. This means builders estimate a typical cost effect from recent tariff actions at $10,900 per home.
The latest HMI survey also revealed that 29% of builders cut home prices in April, unchanged from March. Meanwhile, the average price reduction was 5% in April, the same rate as the previous month. The use of sales incentives was 61% in April, up from 59% in March.
Regionally, homebuilder confidence declined across the four major U.S. census regions.
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.
For the full HMI index breakdown, click here.
