Builder confidence in the U.S. housing market fell again in June 2025, reaching one of its lowest points since 2012, signaling deepening trouble in the residential construction sector.
Builder sentiment drops again
According to the latest NAHB/Wells Fargo Housing Market Index, builder sentiment for newly constructed single-family homes dropped to 32, down two points from May. This marks the third-lowest reading in over a decade, with only April 2020 and December 2022 posting worse scores.
- Current sales conditions: 35 (down 2 points)
- Sales expectations (6 months): 40 (down 2 points)
- Prospective buyer traffic: 21 (lowest since Nov. 2023)
“Buyers are increasingly moving to the sidelines due to elevated mortgage rates and tariff and economic uncertainty,” said NAHB Chairman Buddy Hughes.
Price cuts and incentives ramp up
With affordability concerns mounting, more builders are slashing prices and offering incentives to attract reluctant buyers:
- 37% of builders cut prices in June — the highest share since monthly tracking began in 2022.
- Average price reduction remained at 5%.
- 62% of builders offered sales incentives, up from 61% in May.
Housing market slowdown accelerates
New data also reveals a broader downturn in construction activity:
- Housing starts fell nearly 10% in May, the slowest pace in five years.
- Building permits dropped to an annualized rate of 898,000, nearly 3% below April and the lowest since 2020.
- Homebuilder Lennar missed earnings estimates, citing soft demand, high costs, and regulatory barriers.
Economic uncertainty, policy pressures worsen outlook
Builders are facing mounting headwinds beyond interest rates:
- Labor shortages tied to immigration enforcement are reducing available workforce.
- Tariffs on steel, aluminum, and lumber have driven up material costs.
- Rising inventory is creating price pressure in resale markets, particularly in oversupplied regions.
“Given current market conditions, NAHB is forecasting a decline in single-family starts for 2025,” said NAHB Chief Economist Robert Dietz.
Regional snapshot
Three-month moving averages of builder sentiment reflect broad geographic weakness:
- Northeast: 43 (down 1 point)
- Midwest: 41 (up 1 point)
- South: 33 (down 3 points)
- West: 28 (down 4 points)
What does this mean for homebuyers and the economy?
The housing downturn could signal broader economic risks if combined with softness in other sectors. While affordability may improve for some buyers, the decline in construction threatens jobs and long-term supply.
Key takeaways
- Builder confidence is near its lowest in over a decade.
- Price cuts and incentives are increasing to spur demand.
- Housing starts and permits are well below expectations.
- Economic and policy factors continue to weigh on the housing market.
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