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

U.S. Homebuilder Confidence Unexpectedly Slumps In May

05/15/2025 - 11:51:00 (RTTNews)

(RTTNews) - Reflecting growing uncertainties stemming from elevated interest rates, tariff concerns, building material cost uncertainty and the cloudy economic outlook, the National Association of Home Builders released a report on Thursday showing an unexpected slump by U.S. homebuilder confidence in the month of May.

The report said the NAHB/Wells Fargo Housing Market Index tumbled to 34 in May after inching up to 40 in April. Economists had expected the index to come in unchanged from the previous month.

With the unexpected decrease, the housing market index ties the November 2023 reading as the lowest since hitting 31 in December 2022.

"The spring home buying season has gotten off to a slow start as persistent elevated interest rates, policy uncertainty and building material cost factors hurt builder sentiment in May," said NAHB Chairman Buddy Hughes.

"However, the overwhelming majority of survey responses came before the tariff reduction announcement with China," he added. "Builders expect future trade negotiations and progress on tax policy will help stabilize the economic outlook and strengthen housing demand."

The slump by the heading index reflected decreases by all three of the component indices, with the index gauging current sales conditions plunging to 37 in May from 45 in April.

The gauge charting traffic of prospective buyers also slipped to 23 in May from 25 in April, while the component measuring sales expectations in the next six months edged down to 42 in May from 43 in April.

The NAHB said the latest HMI survey also revealed 34 percent of builders cut home prices in May, up from 29 percent in April and the highest level since December 2023. The average price reduction was 5 percent in May, unchanged from the previous month.

On Friday, the Commerce Department is scheduled to release its report on new residential construction in the month of April.

Housing starts are expected to climb to an annual rate of 1.370 million in April from a rate of 1.324 million in March.

Meanwhile, building permits are expected to decrease to an annual rate of 1.450 million in April from a rate of 1.482 million in March.

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