US homebuilder sentiment falls, driven by large drop in South

[ATLANTA] Confidence among US homebuilders slipped in June, dragged down by rising mortgage rates and materials costs, as well as a sharp drop in sentiment across the South.

An index of overall market conditions from the National Association of Home Builders (NAHB) and Wells Fargo fell two points to 35 in June, based on data released on Monday (Jun 15).

It is lower than the 37 anticipated by economists in a Bloomberg survey.

The homebuilders association partly blamed the drop in the overall index on rising materials prices, financing costs and regulations that are impeding home construction.

The South, the nation’s largest homebuilding region, saw its biggest decline since November 2023.

A reading below 50 means more builders see conditions as poor than good. June’s level marks the 14th straight month that sentiment was below 40, the longest such streak since 2011 to 2012, NAHB said.

Among the index’s components, a gauge of present sales fell two points to 38, while measures of future sales and prospective buyer traffic were unchanged, NAHB’s data showed.

“With the nation short about 1.2 million homes, builder sentiment will remain soft until barriers are eased and conditions improve for home building,” said NAHB chairman Bill Owens, an Ohio builder.

Bloomberg Intelligence analyst Drew Reading said last week that the spring selling season – when home sales reach their annual peaks – had been disappointing so far for publicly-traded homebuilders.

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This was because the soft demand left many with a backlog of orders not yet delivered to customers, which was well short of last year’s levels, he added.

In June, 35 per cent of builders reported lowering prices, against 32 per cent in May.

Meanwhile, 62 per cent said that they were using sales incentives, against 61 per cent in May, marking the 15th consecutive month that at least 60 per cent have used them.

US President Donald Trump announced a series of initiatives to boost home construction and improve affordability. A plan to curb investor ownership of single-family rental homes remains pending in Congress.

Outside of the South, sentiment in the North-east rose to the highest level since October 2025, while sentiment was flat in the West and Midwest.

The federal government will give an update on May’s housing data, starting on Tuesday with its residential construction report. BLOOMBERG