VOL 2025 ISSUE 2
www . elpasobuilders . com
VOL 2025 ISSUE 2
BUILDERSOUTLOOK
PUBLISHED BY THE EL PASO ASSOCIATION OF BUILDERS : NATIONAL , STATE AND LOCAL HOME BUILDING INDUSTRY NEWS
Builder Confidence Falls
Tariff and Housing Cost Concerns raise warning flags
Builder sentiment fell sharply in February over concerns on tariffs , elevated mortgage rates and high housing costs . Builder confidence in the market for newly built single-family homes was 42 in February , down five points from January and the lowest level in five months , according to the National Association of Home Builders ( NAHB )/ Wells Fargo Housing Market Index ( HMI ) released today . “ While builders hold out hope for prodevelopment policies , particularly for regulatory reform , policy uncertainty and cost factors created a reset for 2025 expectations in the most recent HMI ,” said NAHB Chairman Carl Harris , a custom home builder from Wichita , Kan . “ Uncertainty on the tariff front helped push builders ’ expectations for future sales volume down to the lowest level since December 2023 . Incentive use may also be weakening as a sales strategy as elevated interest rates reduce the pool of eligible home buyers .” “ With 32 % of appliances and 30 % of softwood lumber coming from international trade , uncertainty over the scale and scope of tariffs has builders further concerned about costs ,” said NAHB Chief Economist Robert Dietz . “ Reflecting this outlook , builder responses collected prior to a pause for the proposed tariffs on goods from Canada and Mexico yielded a lower HMI reading of 38 , while those collected after the announced one-month pause produced a score of 44 . Addressing the elevated pace of shelter inflation requires bending the housing cost curve to enable adding more attainable housing .” The latest HMI survey also revealed that 26 % of builders cut home prices in February , down from 30 % in January and the lowest share since May 2024 . Meanwhile , the average price reduction was 5 % in February , the same rate as the previous month . The use of sales incentives was 59 % in February , down from 61 % in January . Derived from a monthly survey that NAHB has been conducting for more than 35 years , the NAHB / Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “ good ,” “ fair ” or “ poor .” The survey also asks builders to rate traffic of prospective buyers as “ high to very high ,” “ average ” or “ low to very low .” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor . All three of the major HMI indices posted losses in February . The HMI index gauging current sales conditions fell four points to 46 , the component measuring sales expectations in the next six months plunged 13 points to 46 , and the gauge charting traffic of prospective buyers posted a threepoint decline to 29 . Looking at the three-month moving averages for regional HMI scores , the Northeast fell three points in February to 57 , the Midwest moved two points lower to 45 , the West edged one-point lower to 39 and the South held steady at 46 .
-NAHB