Builders are feeling less confident about the housing market as they navigate economic uncertainty, the threat of tariffs, and high housing costs.
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index fell to 39 in March, down three points from February and the lowest level in seven months. According to Bloomberg data, economists were expecting a reading of 42.
A reading below 50 indicates more builders view conditions as poor rather than good.
“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,” NAHB chair Buddy Hughes, a homebuilder and developer from Lexington, N.C, said in a press release.
Among these tariff-related challenges is the 25% tariff President Trump imposed last week on all imported steel and aluminum products, without exemptions or exceptions, a policy move that could further drive up housing costs.
“Construction firms are facing added cost pressures from tariffs,” NAHB chief economist Robert Dietz said in the release.
“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," he added.
Meanwhile, builders continue to grapple with elevated mortgage rates, which are making it even more challenging to sell homes. Data from Freddie Mac shows that the 30-year fixed mortgage rate remains stuck at around 6.6%, contributing to sluggish housing activity.
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To counter this, builders actively offered incentives to help keep sales moving. The NAHB survey found 29% of builders cut home prices in March, up from 26% in February. The average price cut was 5% in March, unchanged from February. Meanwhile, 59% of builders used sales incentives in March, unchanged from February.
However, the gauge measuring current sales conditions dropped three points to 43, marking the lowest level since December 2023. The prospective buyer traffic gauge posted a five-point decline to 24, while the sales outlook over the next six months held steady at 47.
Dani Romero is a reporter for Yahoo Finance. Follow her on X @daniromerotv.
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