Homebuilder confidence inches up, but the outlook is not pretty

Donald Trump’s trade war has homebuilders down in the dumps, but they’ve become slightly more optimistic of late.

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) for July ticked up to a reading 33. That’s up one point from June and one point below the reading in May.

While it’s an improvement, the index remains near its low points in April 2020 (30) and June 2012 (29) — and it’s the 15th straight month of negative sentiment.

An index reading of 50 or above means builder outlook is more positive than negative regarding current market conditions for new-home construction.

“The passage of the One Big Beautiful Bill Act (OBBBA) provided a number of important wins for households, home builders and small businesses,” NAHB Chairman Buddy Hughes said in a statement. “While this new law should provide economic momentum after a disappointing spring, the housing sector has weakened in 2025 due to poor affordability conditions, particularly from elevated interest rates.”

New-home sales have been a relative bright spot in a housing market plagued by high mortgage rates and sky-high prices, but they cratered in May, and the chaotic trade war has put builders on their heels.

Trump’s April 2 announcement of a new global tariff regime shocked the world and sent markets into free fall. The broader economy got good news when he paused the tariffs until July, and again when he pushed the implementation date to Aug. 1.

But the ups and downs in between have led to threats against not only key trading partners like Canada, Mexico, China and Vietnam, but also on raw materials that builders use in bulk, such as lumber, steel and copper.

Other aspects of the builder survey also ticked up a bit. Respondents’ perceptions of present sales conditions rose from a reading of 35 to 36. The metric of their views for the next six months rose from 40 to 43, possibly as a result of slightly lower mortgage rates. But the sentiment related to buyer traffic dropped from 21 to 20.

“Single-family housing starts will post a decline in 2025 due to ongoing housing affordability challenges,” NAHB chief economist Robert Dietz said in a statement. “Single-family permits are down 6% on a year-to-date basis and builder traffic in the HMI is at a more than two-year low.”