Builder sentiment remains low amid tariffs, high building costs

Builder sentiment slightly improved this month but remained relatively weak amid escalating tariffs and high building expenses, according to the National Association of Homebuilders/Wells Fargo Housing Market Index. .Builder confidence in the market for new single-family homes increased one point this month to 40. The index tracking current sales conditions increased two points to 45, while the index for sales expectations in the next six months fell four points to 43. The index for prospective buyer traffic increased one point to 25. Any reading above 50 indicates that the majority of builders are confident about the current and near-term housing outlook.Sixty percent of builders said their suppliers had either increased or announced increases of material prices because of tariffs. Suppliers reported increasing their prices 6.3 percent — nearly $11,000 per home — in response to expected, enacted or announced tariffs.“The recent dip in mortgage rates may have pushed some buyers off the fence in March, helping builders with sales activity,” said NAHB Chair Buddy Hughes. “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.” Nearly 30 percent of builders cut home prices this month, unchanged from March. The average price reduction was unchanged at 5 percent, while the use of sales incentives increased to 61 percent from 59 percent in March. Single-family authorizations in March dropped 2 percent to 978,000 from 998,000 in February, according to the Census Bureau. Privately-owned housing units greenlighted by building permits increased 1.6 percent to 1.48 million from 1.45 million in February. Other March report findings included:Privately-owned housing starts dropped 11.4 percent to 1.32 million from 1.49 million in February. Privately-owned housing completions dropped 2.1 percent to 1.54 million from 1.58 million in February. Single-family housing starts dropped 14.2 percent to 940,000 from 1.09 million in February. Single-family housing completions dropped nearly 1 percent to 1.02 million.