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.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
26 minutes ago
- Yahoo
Investors Could Be Concerned With DS Sigma Holdings Berhad's (KLSE:DSS) Returns On Capital
What trends should we look for it we want to identify stocks that can multiply in value over the long term? Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. However, after briefly looking over the numbers, we don't think DS Sigma Holdings Berhad (KLSE:DSS) has the makings of a multi-bagger going forward, but let's have a look at why that may be. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. The formula for this calculation on DS Sigma Holdings Berhad is: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.093 = RM11m ÷ (RM135m - RM15m) (Based on the trailing twelve months to March 2025). So, DS Sigma Holdings Berhad has an ROCE of 9.3%. On its own that's a low return, but compared to the average of 7.3% generated by the Packaging industry, it's much better. View our latest analysis for DS Sigma Holdings Berhad Historical performance is a great place to start when researching a stock so above you can see the gauge for DS Sigma Holdings Berhad's ROCE against it's prior returns. If you're interested in investigating DS Sigma Holdings Berhad's past further, check out this free graph covering DS Sigma Holdings Berhad's past earnings, revenue and cash flow. In terms of DS Sigma Holdings Berhad's historical ROCE movements, the trend isn't fantastic. Over the last five years, returns on capital have decreased to 9.3% from 45% five years ago. Meanwhile, the business is utilizing more capital but this hasn't moved the needle much in terms of sales in the past 12 months, so this could reflect longer term investments. It's worth keeping an eye on the company's earnings from here on to see if these investments do end up contributing to the bottom line. On a related note, DS Sigma Holdings Berhad has decreased its current liabilities to 11% of total assets. That could partly explain why the ROCE has dropped. Effectively this means their suppliers or short-term creditors are funding less of the business, which reduces some elements of risk. Since the business is basically funding more of its operations with it's own money, you could argue this has made the business less efficient at generating ROCE. In summary, DS Sigma Holdings Berhad is reinvesting funds back into the business for growth but unfortunately it looks like sales haven't increased much just yet. And investors appear hesitant that the trends will pick up because the stock has fallen 37% in the last year. Therefore based on the analysis done in this article, we don't think DS Sigma Holdings Berhad has the makings of a multi-bagger. If you want to know some of the risks facing DS Sigma Holdings Berhad we've found 2 warning signs (1 is significant!) that you should be aware of before investing here. While DS Sigma Holdings Berhad isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets. — Investing narratives with Fair Values Vita Life Sciences Set for a 12.72% Revenue Growth While Tackling Operational Challenges By Robbo – Community Contributor Fair Value Estimated: A$2.42 · 0.1% Overvalued Vossloh rides a €500 billion wave to boost growth and earnings in the next decade By Chris1 – Community Contributor Fair Value Estimated: €78.41 · 0.1% Overvalued Intuitive Surgical Will Transform Healthcare with 12% Revenue Growth By Unike – Community Contributor Fair Value Estimated: $325.55 · 0.6% Undervalued View more featured narratives — Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Insider
an hour ago
- Business Insider
'Roadblock': Paramount Stock (NASDAQ:PARA) Surges as the Trump Settlement Sputters
As it turns out, entertainment giant Paramount (PARA) was actually fairly close to a deal with President Trump over the 60 Minutes lawsuit. But, when the deal was fairly close, a 'roadblock' emerged and put a halt to the whole matter, at least for now. Investors reacted with surprising strength, and perhaps even more surprising positivity. Paramount shares gained nearly 2.5% in the closing minutes of Friday's trading. Confident Investing Starts Here: The settlement had reached $35 million, reports noted, when Paramount suddenly found itself paralyzed by indecision. That delay caused Trump lawyers to pivot and pull back to their original demand, calling for a $50 million settlement. The biggest problem seems to be that the Federal Communications Commission (FCC) is also involved in this, and needs to sign off on the merger with Skydance as well. Reports suggested that Paramount brass believes that the FCC's sign-off on the deal needs to be contingent on settling the case, but by like token, the idea that requiring FCC approval as part of the settlement looks a lot like a bribe. Trump's legal team, reports note, has already been clear that the Trump suit and the FCC case are two separate matters. But with outside organizations looking to launch their own lawsuits should the settlement go through, looks may count for more here than anyone expected. South Park Losses Mount Meanwhile, as Paramount faces the prospect of losing South Park exclusivity, it quietly pulled another old episode from the field. The pull this time showed up in the Canadian and Australian markets, reports noted, and this time, featured Butters' Very Own Episode pulled from Paramount+. Why, however, is a bit of a mystery. Several South Park episodes are apparently a bit too spicy for streaming, in retrospect, with around a dozen classic episodes set to be pulled from the catalog and relegated to a 'ban list', reports noted. The reports got stranger as an Australian viewer noted that the Paramount+ listing had been pulled, but the episode could still be watched by watching through Paramount+ on Amazon (AMZN) Prime Video. Is Paramount Stock a Good Buy Right Now? Turning to Wall Street, analysts have a Hold consensus rating on PARA stock based on two Buys, eight Holds and five Sells assigned in the past three months, as indicated by the graphic below. After a 18.62% rally in its share price over the past year, the average PARA price target of $12.08 per share implies 2.23% downside risk.
an hour ago
Vance accuses California officials of 'endangering law enforcement' during LA visit
President Trump plans to travel to the NATO Summit next week with a couple of key goals in mind, a senior administration official told reporters Friday. At the top of Trump's priorities: securing 5% defense spending from NATO members, urging alliance members to revitalize their industrial capacities for critical minerals and weapons, and bilateral meetings to reaffirm commitment to allies. On NATO defense spending, the senior administration official said that Trump wants to "secure a historic 5% defense spending pledge from NATO allies, which will strengthen the alliance's combined military capabilities and ensure greater stability in Europe and the world," the official said. President Donald Trump speaks to the press upon arrival at Morristown Municipal Airport in Morristown, New Jersey, June 20, Balce Ceneta/AP The senior administration official said that Trump will also "urge allies to revitalize their industrial capacities in order to create Western supply chains capable of producing the critical minerals infrastructure, weapons and other products necessary for the security of America and her allies." Lastly, the official said that Trump, "intends to hold bilateral meetings with several world leaders, which will focus on issues of shared concern and reaffirm the United States' strong ties with our allies and partners." -ABC News' Michelle Stoddart
