Builders already seeing costs rise despite tariff pauses
While confidence edged up in April, builders are concerned about future sales as supplier price hikes stand to add nearly $11,000 to the cost of a new home.
Homebuilder confidence ticked up this month, but that optimism could soon fade, with many builders reporting that tariff concerns are already affecting the costs of construction materials.
The National Association of Home Builders' monthly housing market index, which measures the health of the single-family market based on builder feedback, came in at 40 for April. That's up a point from March, which saw an easing of mortgage rates during the last two weeks of the month.
"The recent dip in mortgage rates may have pushed some buyers off the fence in March, helping builders with sales activity," NAHB Chairman Buddy Hughes said in the monthly HMI release.
Future sales less certain: Builders were most confident about current sales conditions, but expectations for home sales over the next six months declined. Hughes noted that "builders have expressed growing uncertainty over market conditions" due to tariff-induced price volatility and labor and land shortages.
Tariffs already pushing prices up: In addition to assessing market conditions, builders in the latest survey were asked if tariffs were impacting their business. A majority (60%) said their suppliers have already increased or announced increases due to tariffs, with those cost hikes averaging 6.3% — which could add $10,900 to the cost of building a home, according to the NAHB.
Costs are rising even though many of the tariffs have been delayed or won't take effect until later in the year.
"The uncertainty caused by the mere announcement of tariffs can have an adverse effect on the behavior of consumers and even businesses," said Paul Emrath, vice president for survey and housing policy research for NAHB, in an analysis of the recent tariffs.
Less confident than a year ago: While up from March, builder confidence is down significantly from a year ago, when it came in at 51. In the past two years, the index was at its lowest level in November 2023 when it sank to 34, just a few months after hitting a high of 56 in July 2023.
While confidence fell across all regions, builders in the Northeast remain the most optimistic, with a three-month rolling average of 47. Those in the West are the least confident, with a rolling average of 35.