U.S. Homebuilder Confidence Rises 1 Point to 33, 38% Cut Prices

In July, the confidence of U.S. homebuilders saw a slight increase from a more than two-year low, although the number of companies reducing prices to attract buyers is on the rise. The Housing Market Index, a joint release by the National Association of Home Builders and Wells Fargo, rose by 1 point to 33, remaining one of the lowest values since the end of 2022. This result aligned with the median estimate of economists.

Notably, 38% of builders reported lowering prices in July, the highest proportion since the association began tracking this data monthly in 2022. This indicates that buyers are hesitant to purchase due to limited affordability and mortgage rates nearing 7%. The proportion of builders using sales incentives remained unchanged at 62%.

Among the sub-indices, the current sales conditions index rose by 1 point to 36, after falling to its lowest level since 2012 the previous month. The sales expectations index for the next six months increased by 3 points to 43, but the traffic of potential buyers index fell to its lowest since December 2022.

The slight improvement in overall sentiment was attributed to the passage of the One Big Beautiful Bill, which was seen as a significant benefit for families, homebuilders, and small businesses. However, despite this, the housing industry is expected to remain weak in 2025 due to affordability issues and high interest rates.