Homebuilder confidence drops to 5-month low amid tariff costs

• Confidence among U.S. homebuilders dropped in February to the lowest level since before President Donald Trump took office. That’s according to a new survey from the National Association of Home Builders/Wells Fargo Housing Market Index.
• The Trump administration imposed a 25% tariff on all steel and aluminum imports into the U.S.
• Even higher costs could come if the president moves forward with his proposal for 25% tariffs on Canada.

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Homebuilders are feeling less optimistic about housing market conditions as the Trump administration’s tariffs weigh on current and future sales. According to a new survey from the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index, confidence for newly built, single-family homes is at its lowest level since September 2024.

How much did the numbers fall in February?

On a scale of 0 to 100, builder confidence fell 5 points in February to 42, with sentiment about current sales conditions, sales expectations in the next six months and prospective buyer traffic each falling compared with January 2025.

“While builders hold out hope for pro-development policies, particularly for regulatory reform, policy uncertainty and cost factors created a reset for 2025 expectations,” NAHB chairman Carl Harris said in a statement.

What’s the latest on Trump’s tariffs?

In February 2025, the Trump administration imposed a 25% tariff on all steel and aluminum imports into the U.S.

Builders could see even higher costs if the president moves forward with his proposal for 25% tariffs on Canada, the U.S.’s top source for imported lumber, on March 1.

What do housing costs look like right now?

The uncertainty over tariffs comes on top of high mortgage rates hindering sales.

According to the Harvard Joint Center for Housing Studies, home prices have increased 47% since early 2020, when the COVID-19 pandemic created a real estate boom.

Zillow reported the average U.S. home value is currently $355,328, while the current rate on a 30-year fixed mortgage is at 6.55%.