Homebuilder Sentiment Dips to Seven Month Lows: NAHB

The NAHB/Wells Fargo Housing Market Index (HMI) dropped to 39 in March, its lowest level in seven months, from 42 in February, missing the consensus estimate of 42, as homebuilder sentiment weakened under the pressure of potential tariffs driving up construction costs.

The survey indicated that homebuilders expect tariffs to increase costs by $9,200 per home in typical scenarios. Policy uncertainty is also negatively affecting home buyers and development choices, noted NAHB chief economist Robert Dietz.

“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,” said NAHB chairman Buddy Hughes.

“At the same time, builders are starting to see relief on the regulatory front to bend the rising cost curve, as demonstrated by the Trump administration’s pause of the 2021 IECC building code requirement and move to implement the regulatory definition of ‘waters of the United States’ under the Clean Water Act.”

The survey showed that 29% of homebuilders reduced prices in March, up from 26% in February, while the average price cut held steady at 5%, matching the prior month. Sales incentives remained constant, with 59% of builders offering them in March, the same as in February.