Reports indicate that in June, builders' confidence in the US housing market fell to its lowest level since December 2022. Potential buyers are hesitating due to high mortgage rates and economic uncertainty. The market condition index jointly released by the National Association of Home Builders (NAHB) and Wells Fargo (WFC-US) fell 2 points to 32, significantly below the expected 36. An index below 50 indicates negative market sentiment, compared to 43 at the same time last year.

The index recorded its third-lowest level in recent years. Since 2012, only twice has the index been lower than June's reading: once in December 2022, when mortgage rates sharply rose from their historic lows during the pandemic, and once in April 2020 when the pandemic first broke out. All three components of the index declined: current sales conditions dropped 2 points to 35, future sales expectations fell 2 points to 40, and buyer traffic decreased 2 points to 21, the lowest since the end of 2023.

Nearly 40% of builders are forced to reduce prices to attract sales. NAHB Chief Economist Robert Dietz stated that due to weak market conditions, the association forecasts a decline in single-family home construction this year. To entice hesitant buyers, builders are increasingly relying on sales incentives and discounts. The percentage of respondents reporting price reductions rose to 37% in June, the highest since NAHB began monthly tracking in 2022.

Before this report, one of America's largest builders, Lennar (LEN-US), reported that average home prices in the second quarter fell nearly 9% compared to the same period in 2024, with new orders and delivery guidance also lower than analysts' expectations. Lennar Co-CEO Stuart Miller stated, "Due to sustained high mortgage rates and continued weak consumer confidence, we are driving sales through construction while also offering purchasing incentives to improve affordability for consumers."

According to previous NAHB surveys, builders anticipate that tariffs under the Trump administration may increase construction costs by nearly $11,000 per home. Although the increase in existing home supply benefits potential buyers, it also means more competition for new home builders. In the southern region of the US, builder confidence has fallen to its lowest level since 2012. The government will release the monthly US housing starts report on Wednesday, providing another perspective on the new home market.