Builder Confidence at Third Lowest Reading Since 2012

Builder confidence in the market for newly built single-family homes hit a level of 32 in June, the third lowest reading since 2012, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).

Only twice since 2012 has the HMI reached a lower level: at 31 in December 2022 and at 30 during the start of the pandemic in April 2020.

“Buyers are increasingly moving to the sidelines due to elevated mortgage rates and tariff and economic uncertainty,” said NAHB Chairman Buddy Hughes, a home builder and developer from Lexington, N.C., in a statement. “To help address affordability concerns and bring hesitant buyers off the fence, a growing number of builders are moving to cut prices.”

Of surveyed builders, 37% said they were cutting prices in June—the highest percentage since NAHB began tracking that statistic in 2022. The average price reduction was 5%. 

“Rising inventory levels and prospective home buyers who are on hold waiting for affordability conditions to improve are resulting in weakening price growth in most markets and generating price declines for resales in a growing number of markets,” said NAHB Chief Economist Robert Dietz said in a statement. “Given current market conditions, NAHB is forecasting a decline in single-family starts for 2025.”

The NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

Read the full report here.