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Miami Herald
19-05-2025
- Business
- Miami Herald
Builders Have Bad News for Donald Trump's Housing Market
Builder confidence in the U.S. housing market fell sharply in May, marking its lowest level since November 2023, according to a new report from the National Association of Home Builders (NAHB). Developers are contending with a sluggish selling season and mounting economic pressures. 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.
Newsweek
19-05-2025
- Business
- Newsweek
Builders Have Bad News for Donald Trump's Housing Market
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Builder confidence in the U.S. housing market fell sharply in May, marking its lowest level since November 2023, according to a new report from the National Association of Home Builders (NAHB). Developers are contending with a sluggish selling season and mounting economic pressures. 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. Why It Matters 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. What To Know 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. A real estate sign is seen in front of a house for sale in West Los Angeles on November 20, 2020. A real estate sign is seen in front of a house for sale in West Los Angeles on November 20, 2020. CHRIS DELMAS/AFP via Getty Images What People Are Saying 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." What Happens Next 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.
Reuters
18-03-2025
- Business
- Reuters
US housing starts rebound strongly in February
WASHINGTON, March 18 (Reuters) - U.S. single-family homebuilding rebounded sharply in February, but rising construction costs from tariffs and labor shortages threaten the recovery. Single-family housing starts, which account for the bulk of homebuilding, surged 11.4% to a seasonally adjusted annual rate of 1.108 million units last month, the Commerce Department's Census Bureau said on Tuesday. Data for January was revised to show homebuilding declining to a rate of 995,000 units instead of the previously reported pace of 993,000 units. President Donald Trump this month imposed and later suspended a 25% tariff on most goods from Canada and Mexico, which would have pushed up U.S. duties on Canadian lumber to nearly 40%. But tariffs on Chinese goods were raised to 20% and levies on steel and aluminum went into effect this month. A survey on Monday showed the National Association of Home Builders/Wells Fargo Housing Market Index tumbled to a seven-month low in March, with builders saying they "continue to face elevated building material costs that are exacerbated by tariff issues," also noting "other supply-side challenges that include labor and lot shortages." There have been anecdotes of workers not reporting for duty at construction sites for fear of deportation as the Trump administration cracks down on illegal immigration. Undocumented immigrants account for 23% of construction labor, the Center for American Progress estimated in 2021. Though the average rate on the popular 30-year fixed-rate mortgage has declined from 7% at the start of the year, economic jitters emanating from tariffs and an unprecedented campaign by the Trump administration to shrink the federal government through mass firings of public workers and deep spending cuts are discouraging some potential home buyers. With new housing inventory at levels last seen since December 2007, builders might have no incentive to break new ground on single-family housing projects. Permits for future construction of single-family housing fell 0.2% to a rate of 992,000 units in February.
Yahoo
17-03-2025
- Business
- Yahoo
US homebuilder sentiment drops to seven-month low in March
WASHINGTON (Reuters) - U.S. homebuilder sentiment dropped to a seven-month low in March as tariffs on imported materials raised construction costs, a survey showed on Monday. The National Association of Home Builders/Wells Fargo Housing Market Index dropped three points to 39 this month, the lowest level since August. Economists polled by Reuters had forecast the index at 42. It has erased all the gains booked in the aftermath of President Donald Trump's election victory in November, mirroring similar losses in other confidence measures, including consumer sentiment. Trump this month imposed and later suspended a 25% tariff on most goods from Canada and Mexico, which would have pushed up U.S. duties on Canadian lumber to nearly 40%. But tariffs on Chinese goods were raised to 20% and levies on steel and aluminum went into effect this month. "Construction firms are facing added cost pressures from tariffs," said NAHB chief economist Robert Dietz. "Data from the HMI March survey reveals that builders estimate a typical cost effect from recent tariff actions at $9,200 per home. Uncertainty on policy is also having a negative impact on home buyers and development decisions." New home construction relies heavily on imported materials, including lumber, as well as goods like household appliances. The survey's measure of current sales conditions fell to 43, the lowest level since December 2023, from 46 in February. A gauge of sales expectations in the next six months was unchanged at 47. Its measure of prospective buyers traffic decreased to 24 from 29 in the prior month.
Zawya
18-02-2025
- Business
- Zawya
US homebuilder sentiment drops to five-month low in February
U.S. homebuilder sentiment tumbled to a five-month low in February amid worries that tariffs on imports would combine with higher mortgage rates to further drive up housing costs. The National Association of Home Builders/Wells Fargo Housing Market Index plunged five points to 42 this month, the lowest reading since September. That erased all the gains that were notched in the aftermath of President Donald Trump's election victory in November, when sentiment had risen in anticipation of a less-stringent regulatory environment Trump in his first weeks in office slapped an additional 10% tariff on imported goods from China. A 25% levy on imports from Mexico and Canada was suspended until March. Trump this month raised tariffs on steel and aluminum imports to 25%. New home construction is heavily reliant on imported materials, including lumber, as well as other goods like household appliances. The decline in homebuilder sentiment mirrored a decrease in consumer sentiment. Tariffs have also rattled consumers. "While builders hold out hope for pro-development policies, particularly for regulatory reform, policy uncertainty and cost factors created a reset for 2025 expectations in the most recent HMI," said NAHB Chairman Carl Harris. The survey's measure of current sales conditions fell four points to a five-month low of 46. A gauge of sales expectations in the next six months plunged 13 points to 46, the lowest level since December 2023. Its measure of prospective buyers traffic slipped three points to 29. "With 32% of appliances and 30% of softwood lumber coming from international trade, uncertainty over the scale and scope of tariffs has builders further concerned about costs," said NAHB Chief Economist Robert Dietz. "Addressing the elevated pace of shelter inflation requires bending the housing cost curve to enable adding more attainable housing." The nation is facing a housing shortage, which has boosted rents and contributed to elevated inflation. The average rate on the popular 30-year fixed-rate mortgage is hovering just under 7%. Residential spending rebounded in 2024, lifted by single-family home construction as builders took advantage of a shortage of previously owned homes for sale. (Reporting by Lucia Mutikani; Editing by Andrea Ricci)
