Feelings among the country’s detached home builders fell to a lowest level in February in five months, largely due to concerns about tariffs, and significantly increased costs.
The National Housing Builders Housing Market Index (HMI Association) cut five points from January to 42 reads. Last February, the index was 48.
“Builders hope that regulatory reforms, policy uncertainty and cost factors, among other things, have created a reset to 2025 expectations with the latest HMI,” says Carl, a home builder in Wichita, Kansas. – Chairman Harris said.
Of the three components of the index, current sales terms fell 4 points to 46 points, buyer traffic fell 3 points to 29 points, and sales expectations scored 13 points to 46 points over the next six months.
Builders are already facing a rise in mortgages. The average 30-year fixed mortgage rate ranged from 6%, above 7% in January and February. Home prices are also higher than a year ago, further weakening affordability.
The Canadian and Mexican presidents’ tariffs originally proposed to come into effect in early February, but are about a month behind, but builders still expect higher costs.
“32% of appliances and 30% of coniferous wood coming from international trade are further concerned about costs due to uncertainty in the size and scope of tariffs,” said Robert Dietz, chief economist at NAHB.
The sentiment of housing builders has been steadily gaining since August in anticipation of lower mortgage rates and potential development policies, as the builders pointed out. Despite the lean supply of existing homes for sale, single-family homes are starting lower than they were a year ago.
The decline in builder sentiment that comes just before the very important spring market indicates that supply in the market could be even lower. Several home builders have focused on pullbacks in buyer demand in recent revenue reports.
“Despite the Federal Reserve lawsuit to lower short-term interest rates, mortgage rates remained rising in the fourth quarter, and as home buyers continue to face affordable challenges, the buyers are now facing. “It affected demand.”
Price-lowering builders’ share fell to 26% in February, down from 30% in January, down from lowest shares since May 2024. Other sales incentives also decreased.
This is because incentives are less effective at attracting buyers, according to the NAHB, as high prices and high fees reduced the pool of buyers that drive these profits.
Incentives are not helpful if the buyer is priced well. The marginal buyer pool may be shrinking as the rate remains high. Providing incentives to buyers who buy regardless of price or price means less value for builders.
