Builder sentiment decreased five points to 42 in February; anything below 50 is considered negative for the National Association of Home Builders’ monthly survey, according to NAHB. It reached a record high of 90 in November 2020.
Regarding the three components of the homebuilder index, current sales conditions fell four points to 46; buyer traffic dropped three points to 29; and sales expectations in the next six months plunged 13 points to 46.
Twenty-six percent of builders reported cutting prices in February compared with 30% in January. The average price discount remained at 5% in February. Fifty-nine percent of builders were using sales incentives other than price cuts to improve sales in February compared with 61% in January.
“While builders hold out hope for pro-development 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. “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.”
