Overview

• The National Association of Home Builders/Wells Fargo Housing Market Index dropped five points to 42 in February, signaling the lowest builder confidence since September 2024.
• Builders cite rising mortgage rates, hovering near 7%, and high construction costs as major factors contributing to declining confidence.
• Tariff policies, including existing levies on Chinese goods and potential increases on imports from Canada and Mexico, are increasing uncertainty and material costs for builders.
• Sales expectations for the next six months saw a steep 13-point drop, the sharpest decline since the early pandemic, reflecting growing pessimism about market conditions.
• The decline in builder sentiment raises concerns about reduced housing supply, potentially exacerbating affordability challenges in an already strained market.