T
he National Association of Home Builders' (NAHB) June confidence index hit a 13-year low, with new home prices weakening and buyers holding back. This decline in builder confidence could impact the sector that has been a silver lining for the housing market over the past year.

    Builder confidence fell to 32 in June, down two points from May, according to the NAHB's Housing Market Index. The index measures the health of the new home market and was the third-lowest reading since 2012. The only lower readings occurred in December 2022 and April 2020, when mortgage rates surged and the pandemic hit.

    Familiar headwinds are driving this pessimism, with elevated mortgage rates, tariffs, and economic uncertainty weighing on builders. A significant number of builders – 37% – were cutting prices in June, the highest percentage since tracking began in 2022.

    The NAHB is forecasting a decline in single-family starts for 2025 due to weakening price growth and rising inventory levels. "Prospective home buyers are waiting for affordability conditions to improve," said NAHB Chief Economist Robert Dietz. Housing permits for single-family homes fell 4.7% year-over-year in April, marking the fourth straight month of declines.

    The biggest slowdowns were seen in the South and West, with the Northeast being the only region to post an increase in single-family home permits. Builder sentiment was highest in the Northeast (43) and lowest in the South (33) and West (28). New home sales have been a bright spot this spring, but material costs have risen despite some tariff pauses, making it harder for builders to offer financing incentives.

    Existing home sales this spring have trailed last year's pace, which was the lowest in 30 years. If mortgage rates remain elevated and home prices continue to rise, 2025 could set a new low for existing home sales.