The National
Association of Homebuilders (NAHB) reported on Monday that its housing market
index (HMI) dropped to 39 in March from an unrevised February reading of 42. That was the lowest reading since August
2024 (39).
Economists had expected the HMI to remain unchanged at 42.
A reading below
50 indicates more builders view conditions as poor than good.
According to
the report, two out of three major HMI components recorded decreases in early March. The component
measuring traffic of prospective buyers plunged by 5 points to 24, while the
component tracking current sales conditions dropped by 3 points to 43, the
lowest since December 2023. Meanwhile, the component charting sales
expectations in the next six months held steady at 47.
Commenting on
the latest report, NAHB Chairman Buddy Hughes noted that builders continue to
face elevated building material costs that are exacerbated by tariff issues, as
well as other supply-side challenges that include labor and lot shortages. “At
the same time, builders are starting to see relief on the regulatory front to
bend the rising cost curve, as demonstrated by the Trump administration's pause
of the 2021 IECC building code requirement and move to implement the regulatory
definition of ‘waters of the United States’ under the Clean Water Act
consistent with the U.S. Supreme Court’s Sackett decision,” he added.
Meanwhile, NAHB
Chief Economist Robert Dietz said that construction firms are facing added cost
pressures from tariffs. “Data from the HMI March survey reveals that builders
estimate a typical cost effect from recent tariff actions at $9,200 per home,”
he added. “Uncertainty on policy is also having a negative impact on home
buyers and development decisions.”