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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.
Epoch Times
15-05-2025
- Business
- Epoch Times
US Pending Home Sales Dip By 3.4 Percent to ‘Lowest Level on Record': Report
Pending home sales in the United States declined by 3.4 percent year over year during the four weeks ending May 11, real estate brokerage Redfin said in a May 15 A total of 89,132 pending sales were recorded for the period, which is the 'lowest level on record for this time of year aside from 2020,' the company said. Pending home sales refer to sales contracts that have been signed, but the transaction has not been completed. It acts as a barometer for the future performance of the housing market. Redfin attributed the decline in pending sales to rising home prices and elevated mortgage rates, with these factors pushing up the median monthly housing payment to $2,860, only $6 short of the record high. The median sales price of a home for the four weeks ending May 11 was $390,998, up 1.8 percent year over year. Meanwhile, the average weekly Meme Loggins, a Redfin agent in Portland, Oregon, said there is a 'lot of doubt and hesitation' among prospective buyers. Related Stories 5/12/2025 5/11/2025 'People are starting their home search, then backing out because they either talked to their lender and realized how high their monthly payments would be, or they're feeling jittery about tariffs, a potential recession, and/or the possibility of getting laid off,' Loggins said. 'One smart strategy I'm seeing among the people who are buying right now: They're looking for condos or small houses to lower their monthly payments and simplify their lives. And a smart strategy for sellers is offering mortgage rate buydowns to pique buyers' interest.' A mortgage rate buydown involves offering an upfront fee to lenders to lock in lower interest rates temporarily or permanently. According to a May 15 Potential buyers are waiting on the sidelines, seeking more clarity regarding the economic situation, it said. Meanwhile, sellers are returning to the market. Inventory is rising, with 1.2 million homes for sale in April, up by nearly 20 percent from a year ago. 'Sellers are increasingly using price cuts to bridge the gap to buyers. Nearly 25 percent of listings on Zillow received a price cut in April, a record-high for this time of year in data that reaches back through 2018. Home values are rising at a more moderate pace than previous April cycles,' the report said. Builder Sentiment The National Association of Home Builders (NAHB) Builder confidence in the market for newly built single-family homes fell in May, with the NAHB Housing Market Index falling to 34, down six points from the previous month. 'The spring home buying season has gotten off to a slow start as persistent elevated interest rates, policy uncertainty, and building material cost factors hurt builder sentiment in May,' said NAHB Chairman Buddy Hughes. 'However, the overwhelming majority of survey responses came before the tariff reduction announcement with China. Builders expect future trade negotiations and progress on tax policy will help stabilize the economic outlook and strengthen housing demand.' Both the United States and China recently Meanwhile, any significant jump in home buying activity could require mortgage rates to come down significantly so that monthly payments become more affordable. A major decline in mortgage rates may only happen if the Federal Reserve lowers its benchmark interest rate significantly. However, in the most recent May meeting, Fed officials kept interest rates President Donald Trump has been pushing for cutting down Fed rates. While speaking to reporters on May 8, Trump
Axios
16-04-2025
- Business
- Axios
Why home builder sentiment is in the dumps (hint: tariffs)
The nation's home builders are less than thrilled with the Trump economy thus far. Why it matters: The headwinds for the companies that build single-family homes are multiplying, a bad sign for a country facing a shortage of affordable homes. By the numbers: The National Association of Home Builders Housing Market Index ticked up a scant one point to 40 in April from the previous month, but that was before the recent mortgage-rate increase registered. (Any number below 50 indicates negative sentiment.) 60% of builders said their materials costs have gone up by an average of 6.3% this year, adding $10,900 per average single-family home. Meanwhile: U.S. homes are selling at their slowest pace in 6 years, per real estate site Redfin's data. The typical home that went under contract in March sat on the market for about 1.5 months (47 days). Double what it was during the frenzied pandemic market. A bright spot for buyers: Home prices are growing at the slowest pace in a year and a half, up 2.5% in March from last year. But that's hardly good news for home builders. The big picture: It's not only that tariffs raise the cost of building a house. The drastic "Liberation Day" rollout sparked a Treasury bond selloff that's pushed mortgage rates higher, just as they were starting to cool. The average 30-year-mortgage rate is hovering right below 7% now, according to Mortgage News Daily, after spiking last week. (It's still below January levels, though.) Rising rates and economic uncertainty dampen demand for houses. Meanwhile, the threat of an immigration crackdown hangs over an industry that relies heavily on undocumented labor. What they said: "You have to be crazy to start a new home project right now!'" a home builder told HFE Economics, per a note the ADJ GROUP sent out Wednesday. "The prices of materials over the next three months seem sure to rise, but no one knows by how much," HFE writes. "Tariff risks pose a huge threat to profit margins in this industry and to the prices of everything overall." They point out that if, say, the price of Canadian lumber goes up that would likely lead to U.S. producers to raise prices, too. The bottom line: There was lots of campaign talk about easing the housing shortage with less regulation, but federal policies around trade are making it harder to build homes.
Yahoo
16-04-2025
- Business
- Yahoo
Tariff tensions shake builder confidence during critical spring housing season
The spring housing season is off to a shaky start as tariff concerns rattle builder sentiment. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index rose to 40 in April, a one-point increase from March and modestly above economists' expectations of 38, according to data polled by Bloomberg. Still, a reading below 50 indicates that more builders view conditions as poor than good. "Policy uncertainty is having a negative impact on home builders, making it difficult for them to accurately price homes and make critical business decisions," NAHB chief economist Robert Dietz wrote in the press release. Builders also reported rising costs for building materials due to tariffs. Data from the National Association of Home Builders found that 60% of builders said their suppliers have already hiked prices or are planning to increase them due to trade levies. On average, suppliers have raised prices by 6.3% in response to current, enacted, or anticipated tariffs, adding an estimated $10,900 to the cost of a new home. Read more: When will housing prices drop? Homebuilders continue to navigate a complex landscape made more uncertain by unresolved trade policies with Canada, Mexico, and China. That uncertainty has put downward pressure on a gauge of sales expectations in the next six months, which fell four points to 43 in April. Still, there were some modest gains: The gauge tracking current sales conditions rose two points in April to 45, while the metric tracking prospective buyers' traffic edged up one point to 25. "The recent dip in mortgage rates may have pushed some buyers off the fence in March, helping builders with sales activity,' NAHB chairman Buddy Hughes, a homebuilder and developer from Lexington, N.C., said in the release. "At the same time, builders have expressed growing uncertainty over market conditions as tariffs have increased price volatility for building materials at a time when the industry continues to grapple with labor shortages and a lack of buildable lots," he added. Read more: What Trump's tariffs mean for the economy and your wallet Elevated mortgage rates remain another major hurdle, with some measures showing rates nearing 7%. This persistent volatility is delivering yet another blow to the housing market during the critical spring selling season. In response, builders are actively offering incentives to help sustain sales. According to the NAHB survey, 29% of builders cut home prices in April, which was unchanged from March, with an average price reduction of 5%. Meanwhile, 61% of builders used sales incentives last month, up slightly from 59% last month Dani Romero is a reporter for Yahoo Finance. Follow her on X @daniromerotv.
