- Builder confidence rose to 33 in July, up one point from June, per the NAHB/Wells Fargo Housing Market Index.
- 38% of builders reported price cuts in July—the highest rate in three years—as affordability concerns mount.
- Prospective buyer traffic dropped to its lowest level since 2022, underscoring weak demand despite government incentives.
A Fragile Uptick
Homebuilder sentiment improved modestly in July, helped by the passage of the One Big Beautiful Bill Act. The legislation includes tax relief for households, builders, and small businesses. According to the NAHB/Wells Fargo Housing Market Index, builder confidence rose one point to 33. That’s still well below the neutral level of 50 and marks the 15th straight month of negative sentiment.
Unrelenting Affordability Pressure
The market continues to struggle with elevated mortgage rates and economic uncertainty. As a result, builders are cutting prices more aggressively. In July, 38% reported price reductions—the highest since the NAHB began monthly tracking in 2022. That’s up from 29% in April. The average discount remained at 5%, where it has stayed since last November. About 62% of builders used sales incentives in July, unchanged from the previous month.
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Demand Slump Deepens
Buyer traffic remains a key weakness. The index tracking prospective buyers fell to 20 in July—a one-point drop and the lowest level since late 2022. “Single-family housing starts will post a decline in 2025 due to ongoing housing affordability challenges,” said NAHB Chief Economist Robert Dietz. He noted that single-family permits are down 6% year-to-date.
Regional Breakdown
Builder confidence varied by region. The Northeast rose two points to 45, while the Midwest held steady at 41. The South and West fell to 30 and 25, respectively, reflecting deeper affordability challenges in those areas.
Looking Ahead
The budget bill may provide short-term support, but long-term affordability issues persist. Elevated mortgage rates and weak buyer traffic could push builders to rely more on incentives and price cuts through the rest of 2025.
