US Homebuilder Sentiment Drops to 2.5-Year Low Amid Price Cuts

Confidence among U.S. home builders has fallen to its lowest level in two and a half years, with the NAHB/Wells Fargo Housing Market Index dropping to 32 in June, well below economist expectations. Elevated mortgage rates, economic uncertainty, and President Donald Trump's tariffs have contributed to prospective buyers stepping back, leading to increased use of price cuts and sales incentives; 37% of builders reported cutting prices in June, the highest share since tracking began in 2022. All three components of the index—current sales conditions, expected sales, and buyer traffic—declined, with buyer traffic hitting its lowest level since the end of 2023. Rising inventory levels and affordability concerns are weakening price growth and causing declines in resale prices across many markets. Given these challenging conditions, the NAHB forecasts a decline in single-family housing starts for 2025. Builders are using price incentives to attract hesitant buyers, but overall market sentiment remains negative, reflecting ongoing economic and policy pressures.