Builders Have Bad News for Donald Trump's Housing Market
The NAHB/Wells Fargo Housing Market Index (HMI) dropped six points to 34, mirroring the November 2023 reading and only slightly above December 2022's low of 31.
The downturn comes at a sensitive moment for President Donald Trump, whose administration faces growing scrutiny over trade policy and inflation.
Per the NAHB, persistent uncertainty around tariffs, rising building material costs, and sustained high interest rates have rattled builder sentiment. These headwinds have forced builders to slash prices during the peak homebuying season.
The decline in builder confidence poses challenges for a housing sector central to Trump's economic messaging. The spring season—typically one of the most active periods for home sales—has failed to gain traction.
In response, 34 percent of builders cut home prices in May, up from 29 percent in April, with an average price reduction of 5 percent. Sales incentives remained elevated, with 61 percent of builders offering them, according to the NAHB.
The NAHB/Wells Fargo Housing Market Index is based on a monthly survey asking builders to rate current sales conditions, expectations for the next six months, and prospective buyer traffic.
All three components declined in May: current sales dropped eight points to 37, future sales dipped one point to 42, and buyer traffic slid to 23. A reading below 50 indicates that more builders view conditions as poor than good.
The timing of the latest survey data is also notable.
Approximately 90 percent of builder responses were collected before the May 12 announcement that the U.S. and China had agreed to suspend tariffs for 90 days to resume trade talks.
The U.S. and China agreed to lower their rates by 115 percentage points. This agreement lowered the tariffs imposed on Chinese goods by President Donald Trump to 30 percent and those imposed on U.S. goods by Beijing to 10 percent.
Trump initially announced his sweeping global tariffs on April 2, including a baseline 10 percent on all imported goods and "reciprocal" tariffs.
While this may offer some future relief, it did not factor into the May confidence reading.
Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: "Builders face the usual challenges of volatile commodity prices, but add in the unpredictable impact of tariffs, and it gets even tougher. Price swings on materials make it hard to maintain stable margins, adding pressure to an already tight market."
Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek: "Uncertainty around tariffs and the unknown construction costs are certainly playing into homebuyer and builder sentiment, but I really think the driver is overall housing prices and interest rates. A lot of people are choosing to stay on the sidelines, waiting for the housing market to soften and interest rates to tick down, with the hopes they can find a home and mortgage that is more affordable."
While builders await the effects of the temporary tariff suspension and potential tax reforms, confidence levels remain vulnerable to broader economic shifts.
"Builders buy in bulk and rely on stable margins. When input costs are unpredictable, it's nearly impossible to price homes accurately," Thompson said. "This affects both the affordability for buyers and the profitability for builders, creating a ripple effect throughout the market."
Any sustained progress in trade negotiations or monetary policy adjustments could help boost sentiment in the months ahead. Until then, developers are likely to continue leaning on price cuts and incentives to attract hesitant buyers.
"Just like any market, the housing and interest rate markets are nearly impossible to time, and that could be costing potential homebuyers dearly... Waiting for a housing and interest rate correction or crash may be costing consumers more than it's worth," Powers said.
Related Articles
Florida's Population Makes Major ShiftTexas Housing Market Enters 'Major Correction Phase'America's Most Expensive Area Sees Surge in People Trying to Sell HomesHousing Shortage Hurting Middle-Class Americans Most
2025 NEWSWEEK DIGITAL LLC.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CNBC
17 minutes ago
- CNBC
CCTV Script 12/08/2025
On Monday, local time, U.S. President Trump nominated E.J. Antoni, Chief Economist of the conservative think tank Heritage Foundation, to serve as the Commissioner of the Bureau of Labor Statistics (BLS). This move comes shortly after Trump criticized the unfavorable U.S. employment data as being manipulated and subsequently dismissed the previous commissioner. The market has been closely watching who would take over the position and whether this change would impact the statistical reporting of U.S. economic data. Antoni's appointment still requires confirmation by the U.S. Senate before he can officially assume the role. He has long been a critic of the BLS, advocating for a comprehensive, top-to-bottom review of the bureau. Prior to Trump's public criticism and the dismissal of the previous commissioner, the BLS had been a relatively low-profile agency, rarely entering the public eye. It operates under the U.S. Department of Labor but maintains a degree of independence. The BLS is responsible for collecting crucial data on employment, inflation, and wages, which serve as vital references for business and policy decisions, emphasizing the importance of being free from political interference. In addition to the change in leadership, the BLS is also facing challenges and controversies due to budget cuts. Some analysts have noted that due to insufficient staffing, the BLS has ceased collecting inflation data in certain cities, relying more on estimation methods. Recently, concerns about the credibility of the BLS economic data have also begun to emerge on Wall Street. This raises questions about the potential impact of these changes on the accuracy and reliability of the data that businesses and policymakers depend on. Prominent figures, including Jeffrey Gundlach, known as the "Bond King," and Michael Gapen, an economist at Morgan Stanley, have expressed concerns that U.S. economic data has become unreliable. They argue that this could lead to skepticism about the quality of data released by U.S. government agencies. Currently, the market is closely watching the upcoming release of the U.S. Consumer Price Index (CPI) report for July, scheduled for Tuesday local time. This inflation report is expected to provide critical insights into the state of the economy. Analysts point out that concerns over inflation data performance led to a decline in the three major U.S. stock indices overnight. Market forecasts suggest that the July CPI will show a monthly increase of 0.2% and a yearly increase of 2.8%. When excluding volatile food and energy prices, the core CPI is expected to rise 0.3% monthly and 3.1% yearly. The market is also hoping to glean signals from the latest inflation data regarding the Federal Reserve's potential rate-cut path. However, Wall Street remains divided on the timing of rate cuts. One camp believes the Fed will cut rates as early as September, arguing that such a move is overdue. This divergence in expectations highlights the uncertainty surrounding monetary policy and its impact on the economy. 'I think the rate right now is modestly because rates are lower, therefore stocks must go higher, but the damage that perhaps modestly restrictive rates are doing to the economy and eventually corporate profits would be reduced." However, another camp believes that the Federal Reserve will continue to wait and see, monitoring the impact of tariffs on inflation before making any decisions. "We don't think it'd be September, so the Fed will take this time. Powell, if he doesn't have too much pressure, will continue at his path, which we believe is the case, and we'll likely see the Fed act in December and then aggressively act next year. " Morgan Stanley and Bank of America both predict that the Federal Reserve will not cut rates this year, while JP Morgan Chase anticipates three rate cuts in 2025.
Wall Street Journal
17 minutes ago
- Wall Street Journal
Gold Edges Lower Amid Prospects of Easing Geopolitical Tensions
2351 GMT — Gold edges lower in the early Asian session amid prospects of easing geopolitical tensions that typically reduce the safe-haven appeal of the precious metal. Although Friday's meeting between U.S. President Trump and Russian President Putin ended without any breakthrough, Trump told European leaders that he was open to offering U.S. security guarantees to Ukraine, according to several European officials. Trump said Putin had accepted that any peace in the Russia-Ukraine conflict would need to include the presence of Western troops in Ukraine. Spot gold is 0.2% lower at $3,327.58/oz. (
Bloomberg
17 minutes ago
- Bloomberg
China's Great Wall Opens Brazil Car Plant, Seeks Site for Second
Chinese automaker Great Wall Motor Co. may have just opened its first factory in Brazil, but is already scoping out sites for a second plant as it ramps up its ambitions in South America's largest economy. The Iracemápolis, São Paulo facility was opened Aug. 15, four years after Great Wall bought it from Daimler AG. Three models will be produced there — the Haval H6 and H9 sport utility vehicles, and the Power P30 pickup truck.
