Residential Real Estate News
U.S. Builder Sentiment Declines Amid Economic Uncertainty and Rising Costs
Economic uncertainty, potential tariffs, and high construction costs contributed to a decline in U.S. builder sentiment in March 2025, despite optimism that regulatory changes could improve business conditions.
According to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), confidence among U.S. home builders in the newly built single-family home market fell to 39 in March, a three-point drop from February and the lowest level in seven months.
"Builders continue to grapple with high material costs, exacerbated by tariff concerns, as well as ongoing supply-side challenges like labor and lot shortages," said NAHB Chairman Buddy Hughes, a home builder and developer from Lexington, N.C. "However, there is some relief on the regulatory front, as demonstrated by the Trump administration's pause on the 2021 IECC building code requirement and its efforts to align the definition of 'waters of the United States' under the Clean Water Act with the U.S. Supreme Court's Sackett decision."
NAHB Chief Economist Robert Dietz highlighted the financial strain on construction firms due to tariffs. "Our March HMI survey shows that builders estimate recent tariff actions have added approximately $9,200 in costs per home. Additionally, uncertainty around policy is dampening homebuyer confidence and affecting development decisions," he said.
The survey also revealed that 29% of builders reduced home prices in March, up from 26% in February. The average price reduction remained steady at 5%. Meanwhile, 59% of builders used sales incentives in March, unchanged from the previous month.
In March, the index tracking current sales conditions fell three points to 43, its lowest since December 2023. The gauge measuring prospective buyer traffic dropped five points to 24, while the sales expectations index for the next six months held steady at 47.
Regionally, the three-month moving average of HMI scores showed declines across all areas. The Northeast fell three points to 54, the Midwest dropped three points to 42, the South declined four points to 42, and the West posted a two-point decrease to 37.
