Sentiment among US homebuilders weakened further in February as affordability pressures and elevated construction costs continued to weigh on demand, underscoring persistent strains in the residential property market.
The National Association of Home Builders/Wells Fargo Housing Market Index slipped one point to 36, remaining below the 50 break-even level for a 22nd consecutive month. Economists polled by Reuters had expected the index to rise to 38. The reading reflects subdued confidence despite measures by the Trump administration aimed at improving affordability, including purchases of mortgage-backed securities and a ban on institutional investors acquiring single-family homes.
Builders cited high land and construction costs and still-elevated house prices relative to incomes as key deterrents for prospective buyers. NAHB chairman Buddy Hughes said reduced expectations for future sales reflected affordability challenges that were contributing to weaker overall consumer confidence. While most builders continue to deploy incentives, including price cuts, many buyers remain on the sidelines.
Trade and labour dynamics have added further pressure. President Donald Trump’s tariffs have increased prices for building materials and appliances, while immigration enforcement actions, including raids at construction sites, have constrained labour supply. Limited availability of building lots has compounded these constraints. Soft demand has also resulted in an overhang of unsold new homes.
The share of builders cutting prices fell to 36% from 40% in January, marking a nine-month low, although the average reduction remained at 6%. The proportion offering incentives was unchanged at 65%, the 11th consecutive month above 60%. The survey’s gauge of current sales conditions held steady at 41, while the measure of future sales declined three points to 46 and prospective buyer traffic dropped to 22. NAHB chief economist Robert Dietz said policy measures that reduce construction costs and expand supply would be central to restoring momentum, noting that easing inflation could help lower mortgage and builder loan rates.
