Financial News: U.S. Homebuilder Confidence Unexpectedly Slumps In Februar

U.S. Homebuilder Confidence Unexpectedly Slumps In February

02/18/2025 - 11:43:00 (RTTNews)

(RTTNews) - Homebuilder confidence in the U.S. has unexpectedly deteriorated in the month of February, according to a report released by the National Association of Home Builders on Tuesday.

The report said the NAHB/Wells Fargo Housing Market Index slumped to 42 in February after inching up to 47 in January. Economists had expected the index to come in unchanged.

"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," he added. "Incentive use may also be weakening as a sales strategy as elevated interest rates reduce the pool of eligible home buyers."

The unexpected decrease by the housing market index partly reflected a steep drop by the component measuring sales expectations in the next six months, which plunged to 46 in February from 59 in January.

The index gauging current sales conditions also fell to 46 in February from 50 in January, while the gauge charting traffic of prospective buyers dipped to 29 in February from 32 in January.

The latest HMI survey also revealed that 26 percent of builders cut home prices in February, down from 30 percent in January and the lowest share since May 2024. Meanwhile, the average price reduction was 5 percent in February, the same rate as the previous month.

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