Builder Confidence Declined 6 Points to 34 in May

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Builder Confidence Declined 6 Points to 34 in May

Washington, DC, May 15, 2025-Builder confidence in the market for newly built single-family homes was 34 in May, down six points from April, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). This ties the November 2023 reading, and is the lowest since the index hit 31 in December 2022.

“The spring home buying season has gotten off to a slow start as persistent elevated interest rates, policy uncertainty and building material cost factors hurt builder sentiment in May,” said NAHB chairman Buddy Hughes, a home builder and developer from Lexington, N.C. “However, the overwhelming majority of survey responses came before the tariff reduction announcement with China. Builders expect future trade negotiations and progress on tax policy will help stabilize the economic outlook and strengthen housing demand.”

“Policy uncertainty stemming in large part from the stop-and-start tariff issues has hurt builder confidence but the initial trade arrangements with the United Kingdom and China are a welcome development,” said NAHB chief economist Robert Dietz. “Still, the overall actions on tariffs in recent weeks have had a negative impact on builders, as 78% reported difficulties pricing their homes recently due to uncertainty around material prices.”

The latest HMI survey also revealed that 34% of builders cut home prices in May, up from 29% in April and the highest level since December 2023 (36%). Meanwhile, the average price reduction was 5% in May, unchanged from the previous month. The use of sales incentives was 61% in May, the same rate as the previous month.

All three of the major HMI indices posted losses in May. The HMI index gauging current sales conditions fell eight points in May to a level of 37, the component measuring sales expectations in the next six months edged one-point lower to 42 while the gauge charting traffic of prospective buyers dropped two points to 23.

Looking at the three-month moving averages for regional HMI scores, the Northeast fell three points to 44, the Midwest moved one point lower to 40, the South dropped two points to 37 and the West posted a two-point decline to 33.