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Homebuilder sentiment wavered in June as the industry responded to elevated mortgage rates and economic uncertainty impacting consumers today.
Builder sentiment dropped 2 points between May 2025 and June 2025 to 32 on the National Association of Home Builders (NAHB) / Wells Fargo Housing Market Index (HMI), according to a report released on Tuesday. In June 2024, the index was at 43. An index below 50 is considered negative.
June’s HMI marked the third-lowest reading of builder sentiment since 2012. In December 2022, the index hit 31 after a spike in mortgage rates post-pandemic, and in April 2020 at the start of the pandemic, when the index tanked by more than 40 points to 30.
“Buyers are increasingly moving to the sidelines due to elevated mortgage rates and tariff and economic uncertainty,” NAHB Chairman Buddy Hughes said in a statement on Tuesday. “To help address affordability concerns and bring hesitant buyers off the fence, a growing number of builders are moving to cut prices.”
Thirty-seven percent of builders cut prices in June, the highest portion since the NAHB started tracking price cuts in 2022. In May, 34 percent of builders reported cutting prices, and 29 percent reported doing so in April. The average price reduction remained consistent at 5 percent, which is about what is has been since November, the NAHB reported. Sales incentives were used by 62 percent of builders, up one percentage point from the previous month.
Because of recent tariff negotiations and pullbacks from the Trump administration, many analysts expected a small improvement in builder sentiment, but growing inventory and little enthusiasm for buyers to enter the market right now has continued to weigh on builders.
The HMI index for current sales conditions dropped 2 points in June to 35, the component relating to sales expectations in the next six months dropped 2 points to 40 and the component tracking prospective buyer traffic slid 2 points to 21, its lowest level since November 2023.
“Rising inventory levels and prospective homebuyers 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,” NAHB Chief Economist Robert Dietz said in a statement. “Given current market conditions, NAHB is forecasting a decline in single-family starts for 2025.”
According to the three-month moving averages of regional HMI scores, the West saw the greatest decline, by 4 points, to 28. Meanwhile, the South fell by 3 points to 33, the Northeast fell by 1 point to 43 and the Midwest actually gained 1 point to hit 41.
