U.S. Homebuilder Confidence Rises 1 Point to 40 Amid Rising Costs

U.S. homebuilder confidence edged higher in April, but the outlook remains subdued due to rising material costs and tariffs. The overall market sentiment index, compiled by the National Association of Home Builders (NAHB) and Wells Fargo, rose by one point to 40, remaining in the lower range since the end of 2023. Economists had anticipated a median value of 38.

The index's components showed mixed results. Builders' expectations for sales over the next six months declined by four points to 43, marking the lowest level since November 2023. In contrast, the current sales index for single-family homes and the traffic of potential buyers both saw slight increases.

The data suggests that the U.S. new home construction market will continue to face challenges on both the demand and supply sides. Homebuyers are grappling with high housing prices and elevated mortgage rates, which surged to 6.81% last week. Additionally, builders are contending with higher material costs due to tariffs.

The NAHB estimates that tariffs imposed by the Trump administration have increased the cost of each new home by $10,900. Approximately 60% of builders reported that suppliers have raised prices or plan to do so due to tariffs.

NAHB Chief Economist Robert Dietz stated, "Policy uncertainty is negatively impacting homebuilders, making it difficult for them to accurately price and make critical business decisions."

Industry analysts note that with home prices near historical highs, many potential buyers have become accustomed to developers offering substantial purchase incentives. The NAHB survey revealed that 61% of builders reported using sales incentives in April, while 29% reported price reductions, unchanged from the previous month.