New Homebuilder Sentiment Report Drops Sharply As Builders Lose Confidence

Home builders are not feeling confident in a housing market recovery according to a new survey.

The National Association of Home Builders released its Housing Market Index on Tuesday.

The builder confidence score fell from 47 in January to 42. Anything under 50 is considered negative.

The index reflected declining homebuilder confidence in the single-family housing market as fewer Americans are buying single-family homes.

Current sales conditions decreased to 46, while future sales expectations in the next six months plummeted by 13 points to 46.

The index revealed that traffic by prospective buyers dropped to 29.

With the market remaining weak, 26% of builders lowered prices but that's down from 30% in the January report.

Incentives also dipped slightly, from 61% to 59%.

The HMI has historically tracked housing market trends, fluctuating due to economic conditions.

While it peaked at 90 in 2020, recent interest rates and affordability issues have weighed on builder sentiment.

Key factors like mortgage rates, employment trends, and material costs continue to shape the index.

The index reflects growing concerns from buyers and builders.

Experts are concerned about the future of affordable housing across the country as the sector faces a massive shortage in the last few years, reported Multi-Housing News.

An analysis by CoreLogic showed tariffs by President Donald Trump could add $20,000 to the cost of building a new home as building materials are imported from Mexico and Canada.

In December of last year, data revealed that build-to-rent homes now accounted for 10% of single-family housing as home ownership became too expensive.

Homeownership has become increasingly unattainable for millennials and Gen Z who are priced out of the homebuying process by Baby Boomers.