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 and Wells Fargo fell 2 points to 35 this month, according to data released Monday, lower than the 37 anticipated by economists in a Bloomberg survey. 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 sentiment was below 40, the longest such streak since 2011-2012, NAHB said.
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Among the index's components, a gauge of present sales fell 2 points to 38, while measures of future sales and prospective buyer traffic were unchanged, NAHB's data show.
The homebuilders association partly blamed the drop in the overall index on rising materials prices, financing costs and regulations that are impeding home construction.
"With the nation short about 1.2 million homes, builder sentiment will remain soft until barriers are eased and conditions improve for home building," NAHB Chairman Bill Owens, an Ohio builder, said in a release.
The spring selling season — when home sales reach their annual peaks — has been disappointing so far for publicly traded homebuilders, with soft demand leaving many with a backlog of orders not yet delivered to customers that is well short of last year's levels, Bloomberg Intelligence analyst Drew Reading said in a note last week.
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This month, 35% of builders reported lowering prices, compared with 32% in May. Meantime, 62% said they're using sales incentives, compared with 61% in May, marking the 15th consecutive month that at least 60% have used them.
President Donald Trump has 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 Northeast rose to the highest level since October, while sentiment was flat in the West and Midwest.
The federal government will give an update on May housing starts on Tuesday with its residential construction report.
