Home builder confidence fell in March to its lowest level in seven months, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index. Walton Global EVP of Capital Markets Katie Hubbard explains why confidence is falling in the video above.
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Homebuilder sentiment ticked down in March to a seven-month low. The survey from the National Association of Home Builders noted builders are feeling the pressure of elevated construction costs among other supply side challenges. Joining me now with more on the state of the housing market, we've got Katie Hubbard, Walton Global's executive vice president of capital markets. Good to have you here with us. So just take us into what builders are navigating right now from what you're able to see through some of the data points.
Yeah, Brad, thanks so much for having me. So our builder clients, which are the top public home builders, they're definitely feeling the effects of the uncertainty in the marketplace and the volatility. The demand is still there. People still want to buy homes, but with tariffs and potential, you know, deportation, increased labor costs and still elevated mortgage rates, you know, there's there's no surprise that home builder confidence did go down.
From what you can quantify right now, what would be the impact of tariffs on the home builders and potentially the home purchasers, the buyers out there as well?
Yeah, so we saw the tariffs under Trump's first administration and so typically, you know, what we're seeing is increased housing prices of up to $4 to $8,000 for for lumber. And then also we're looking at, you know, Gypsum coming from Mexico, which is the product that is made to use made for drywall. And then with China, we've got steel prices and appliances coming from China. So all of those tariffs combined, you know, could potentially increase the housing prices, you know, $5 to $10,000. Uh but in the near term, in the near term, home builders are building going into spring season with lumber that they purchased on lumber futures about six months ago. So we're really not going to see the effects um until later this year on what that will do for for the home by for the home builders. And then it is anticipated that they will push a lot of those costs onto the ultimate home buyers. However, it's important for them to keep their volume going and they want to they want to build the homes. So they're going to just build smaller homes to really offset that cost to keep people comfortable at the at the average um housing uh at the monthly payment because that's really what the entry-level home purchasers are sensitive to that monthly home payment. So they'll just build smaller homes and adjust.