U.S. homebuilders raise alarm over tariffs as sentiment falls to 5-month low
Sentiment among the nation’s single-family homebuilders dropped to the lowest level in five months in February, largely due to concern over tariffs, which would raise their costs significantly.
Sentiment among the nation’s single-family homebuilders dropped to the lowest level in five months in February, largely due to concern over tariffs, which would raise their costs significantly.
The National Association of Home Builders’ Housing Market Index (HMI) dropped a sharp 5 points from January to a reading of 42. Anything below 50 is considered negative sentiment. Last February, the index stood at 48.
“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, a home builder from Wichita, Kansas.
Of the index’s three components, current sales conditions fell 4 points to 46, buyer traffic fell 3 points to 29 and sales expectations in the next six months plunged 13 points to 46. That last component hit its lowest level since December 2023.
Builders are already facing elevated mortgage rates. The average rate on the 30-year fixed was over 7% for January and February after earlier being in the 6% range. Home prices are also higher than they were a year ago, weakening affordability further.
Rating: 5