Home builder sentiment took a hit in February, with the National Association of Home Builders (NAHB) reporting a drop in their confidence index from 47 in January to 42. This figure is now well below the neutral benchmark of 50, signaling contraction. All three components of the index – buyer traffic, current sales and future sales expectations – decreased, with future sales expectations seeing a significant 13-point drop to their lowest level since December 2023.
What’s the bottom line?
NAHB Chief Economist Robert Dietz noted that the decline was driven by uncertainty over the “scale and scope of tariffs,” with 32% of appliances and 30% of softwood lumber coming from international trade. However, the survey timing appears to have impacted the results. Responses collected before the announcement of a one-month tariff pause on goods from Canada and Mexico recorded a lower Housing Market Index (HMI) of 38, while those gathered after the pause produced a higher score of 44. This suggests the decline in sentiment could have been less severe with different survey timing.