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NBC News
3 days ago
- Business
- NBC News
Homebuilder sentiment nears pandemic low as economic uncertainty plagues consumers
Higher mortgage rates and uncertainty in the broader economy continue to weigh on consumers — and consequently on the nation's homebuilders. Builder sentiment in June dropped 2 points from May to 32 on the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). Anything below 50 is considered negative. The index stood at 43 in June 2024. Analysts had been expecting a slight improvement, given recent tariff negotiations and pullbacks by the Trump administration. This index has only seen a lower reading than June's level twice since 2012 — in December 2022, after mortgage rates shot up from record lows during the first two years of the pandemic, and in April 2020 at the very start of the pandemic. Of the index's three components, current sales conditions fell 2 points to 35, sales expectations in the next six months dropped 2 points to 40, and buyer traffic fell 2 points to 21, the lowest reading on that metric since the end of 2023. 'Buyers are increasingly moving to the sidelines due to elevated mortgage rates and tariff and economic uncertainty,' said Buddy Hughes, NAHB chairman and a homebuilder from Lexington, North Carolina, in a release. 'To help address affordability concerns and bring hesitant buyers off the fence, a growing number of builders are moving to cut prices.' In the June survey, 37% of builders said they had cut prices, the highest share since NAHB started tracking the monthly metric three years ago. That is up from 34% who reported cutting prices in May and 29% in April. The average price reduction was 5%, which has been steady since late last year. 'Rising inventory levels and prospective home buyers who are on hold waiting for affordability conditions to improve are resulting in weakening price growth in most markets and generating price declines for resales in a growing number of markets,' said Robert Dietz, chief economist at the NAHB. 'Given current market conditions, NAHB is forecasting a decline in single-family starts for 2025.' The report follows quarterly earnings from Lennar, one of the nation's largest homebuilders, in which the second-quarter average home price dropped nearly 9% from the same quarter in 2024. Guidance on new orders and deliveries was also below analysts' expectations. 'As mortgage interest rates remained higher and consumer confidence continued to weaken, we drove volume with starts while incentivizing sales to enable affordability and help consumers to purchase homes,' said Lennar co-CEO Stuart Miller in an earnings release. Regionally, on a three-month moving average, the South and West showed the weakest builder sentiment. Those are the regions where the most homes are built.
Reuters
3 days ago
- Business
- Reuters
US homebuilder sentiment skids to 2-1/2-year low, NAHB says
June 17 (Reuters) - A gauge of U.S. homebuilder sentiment slid unexpectedly to its lowest level in two and a half years in June, with more than a third of residential construction firms cutting prices to lure buyers sidelined by high mortgage rates and economic uncertainty due to President Donald Trump's tariffs. The National Association of Home Builders/Wells Fargo Housing Market Index fell to 32, the lowest reading since December 2022, from 34 in May. Economists polled by Reuters had expected the sentiment score to improve to 36. Measures of current sales conditions, future sales expectations and buyer foot traffic all fell. On a regional basis, the Northeast posted a small rise while the South, Midwest and West all declined. "Rising inventory levels and prospective home buyers who are on hold waiting for affordability conditions to improve are resulting in weakening price growth in most markets and generating price declines for resales in a growing number of markets," Robert Dietz, NAHB's chief economist, said in a statement. "Given current market conditions, NAHB is forecasting a decline in single-family starts for 2025." Mortgage rates remain elevated. The average rate on the most popular home loan, the 30-year fixed-rate mortgage, was 6.84% last week, according to home finance firm Freddie Mac, squarely in the middle of the 6.60% to 7.04% range over the past six months. "Buyers are increasingly moving to the sidelines due to elevated mortgage rates and tariff and economic uncertainty," said NAHB Chairman Buddy Hughes, a home builder and developer based in Lexington, North Carolina. "To help address affordability concerns and bring hesitant buyers off the fence, a growing number of builders are moving to cut prices." The survey showed 37% of builders were cutting prices in June, the highest percentage since NAHB began tracking the metric on a monthly basis in 2022. That figure was up from 34% in May and 29% in April, while the average price cut held steady at 5%. The use of any kind of incentive ticked up a point to 62%.
CNBC
3 days ago
- Business
- CNBC
Homebuilder sentiment nears pandemic low as economic uncertainty plagues consumers
Higher mortgage rates and uncertainty in the broader economy continue to weigh on consumers — and consequently on the nation's homebuilders. Builder sentiment in June dropped 2 points from May to 32 on the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). Anything below 50 is considered negative. The index stood at 43 in June 2024. Analysts had been expecting a slight improvement, given recent tariff negotiations and pullbacks by the Trump administration. This index has only seen a lower reading than June's level twice since 2012 – back in December 2022, after mortgage rates shot up from record lows during the first two years of the pandemic, and in April 2020 at the very start of the pandemic. Of the index's three components, current sales conditions fell 2 points to 35, sales expectations in the next six months dropped 2 points to 40, and buyer traffic fell 2 points to 21, the lowest reading on that metric since the end of 2023. "Buyers are increasingly moving to the sidelines due to elevated mortgage rates and tariff and economic uncertainty," said Buddy Hughes, NAHB chairman and a homebuilder from Lexington, North Carolina, in a release. "To help address affordability concerns and bring hesitant buyers off the fence, a growing number of builders are moving to cut prices." In the June survey, 37% of builders said they had cut prices, the highest share since NAHB started tracking the monthly metric three years ago. That is up from 34% who reported cutting prices in May and 29% in April. The average price reduction was 5%, which has been steady since late last year. "Rising inventory levels and prospective home buyers who are on hold waiting for affordability conditions to improve are resulting in weakening price growth in most markets and generating price declines for resales in a growing number of markets," said Robert Dietz, NAHB chief economist. "Given current market conditions, NAHB is forecasting a decline in single-family starts for 2025." The report follow quarterly earnings from Lennar, one of the nation's largest homebuilders, in which second-quarter average home price dropped nearly 9% from the same quarter in 2024. Guidance on new orders and deliveries was also below analysts' expectations. "As mortgage interest rates remained higher and consumer confidence continued to weaken, we drove volume with starts while incentivizing sales to enable affordability and help consumers to purchase homes," said Lennar co-CEO Stuart Miller in an earnings release. Regionally, on a three-month moving average, the South and West showed the weakest builder sentiment. Those are the regions where the most homes are built.
Yahoo
27-04-2025
- Business
- Yahoo
A starter home now costs $1 million in half the states in the U.S., report reveals
Buying a starter home as a first-time buyer is supposed to be exciting, and a recognition of financial security. But in more U.S. cities, getting a starter home is even more out of reach, given the $1 million barrier to entry in hundreds of cities. A new housing report reveals the hurdle to becoming a first-time homebuyer is now even higher in hundreds of U.S. cities. Housing platform app Zillow reports there are now 233 locations in the U.S. where a simple 'starter home'—a smaller, less-expensive route to owning a larger house—will now run you $1 million or more. The increase represents a dramatic rise from five years ago when there were only 85 cities with million-dollar starter homes. The implications include significantly higher down payments, elevated monthly mortgage payments and more difficulty for low- and middle-income buyers to get on the path to homeownership. And it's not just a California problem, wrote Zillow economic analyst Anushna Prakash. New York, New Jersey, Florida, Massachusetts, Washington, and Texas now boast cities in the million-dollar-starter-home club. This is even more evidence that the housing affordability crisis is 'here to stay,' according to new research from Oxford Economics. In a briefing this month, the firm reported the national Housing Affordability Index (HAI) was 72.8 in the last quarter of 2024, which means a household that earns the U.S. median income of about $80,000, only had 73% of the money it would need to afford a median-priced home. That means a prospective homebuyer would need a pay hike of about $30,000 to make it work at that home price. And there are no quick fixes on the horizon, according to Oxford Economics. Even if home prices stay flat this year, the HAI isn't projected to approach the affordability threshold until after 2035. Other factors like higher property tax and insurance, low housing inventory, and poor prospects for lower mortgage rates are also major factors. According to Federal Reserve Economic Data, the median home price has risen 31% in the past five years. In 2020, the median sales price was $317,000 compared to the current median price of $416,900. Even though that price is down from its late 2022 peak of $442,600, prices are still significantly higher than they were five years ago. Builders have also signaled that President Trump's tariffs won't do hopeful homebuyers any favors. Tariffs on imported goods are projected to have a cost impact of $10,900 per home, according to a National Association of Home Builders and Wells Fargo Housing Market Index survey. D.R. Horton, a $39 billion homebuilder, missed earnings estimates this month and cut its revenue forecast for the year down to $33 to $34.8 billion from $36 billion to $37.5 billion. CEO Paul Romanowski told investors the spring home-selling season, usually the busiest period for buyers and sellers, is suppressed because of plunging consumer confidence and affordability issues. 'This year's spring selling season started slower than expected, as potential homebuyers have been more cautious due to continued affordability constraints and declining consumer confidence,' Romanowski said. ''We expect our incentive levels to remain elevated and increase further, the extent to which will depend on market conditions and changes in mortgage interest rates.' This story was originally featured on
Yahoo
23-04-2025
- Business
- Yahoo
Dave Ramsey's Take on Trump's Tariffs Impacting the Housing Market
As the U.S. housing market grapples with the implications of newly imposed tariffs under President Donald Trump's administration, financial expert Dave Ramsey offered a perspective on his YouTube channel that diverges from many industry analysts. Read Next: For You: While Ramsey downplays the potential impact of these tariffs on housing affordability and supply, other experts warn of significant cost increases and market disruptions. In a recent discussion, Ramsey addressed concerns about the effect of tariffs on the housing market. He suggested that while tariffs might lead to some cost increases, they are unlikely to significantly affect housing affordability or supply. Ramsey emphasized that the housing market is influenced by a multitude of factors and tariffs represent just one component. Discover Next: Contrary to Ramsey's assessment, numerous industry experts and organizations have highlighted the following substantial impact tariffs could have on the housing market. The National Association of Home Builders (NAHB) estimates that tariffs on imported building materials from countries like Canada, Mexico and China could raise the cost of constructing a single-family home by approximately $7,500 to $10,000. According to Reuters, data from March 2025 indicates a 14.2% decline in U.S. single-family home construction, reaching the lowest level since July of the previous year. This downturn is attributed to increased costs from import tariffs, despite falling mortgage rates. The NAHB and Wells Fargo Housing Market Index reported a drop in builder confidence, citing concerns over tariffs, elevated mortgage rates and high housing costs. The impact of tariffs extends beyond construction costs and also affects the following. A report by Redfin indicates that over 30% of Americans are postponing plans to purchase big-ticket items, including homes, due to economic uncertainties stemming from tariff policies. Tariffs on essential building materials like lumber and gypsum, primarily imported from Canada and Mexico, are expected to exacerbate existing shortages, further driving up prices. While Ramsey maintains that tariffs will not significantly disrupt the housing market, a growing body of evidence suggests otherwise. Increased construction costs, declining housing starts and reduced consumer confidence point to a market under strain. As the situation evolves, prospective homebuyers and industry stakeholders should stay informed and consider the potential long-term effects of these trade policies. Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on More From GOBankingRates Mark Cuban: Trump's Tariffs Will Affect This Class of People the MostThese 10 Used Cars Will Last Longer Than an Average New VehicleHow To Get the Most Value From Your Costco Membership in 20254 Affordable Car Brands You Won't Regret Buying in 2025 This article originally appeared on Dave Ramsey's Take on Trump's Tariffs Impacting the Housing Market
