Builder confidence fell sharply in May, dropping to its lowest level since November 2023, the National Association of Home Builders reported, citing the NAHB/Wells Fargo Housing Market Index. 

The decline comes as builders are rattled by tariff concerns, a cloudy economic outlook, elevated interest rates and building-material cost uncertainty, the NAHB said. 

“Policy uncertainty stemming in large part from the stop-and-start tariff issues has hurt builder confidence, but the initial trade arrangements with the United Kingdom and China are a welcome development,” said NAHB Chief Economist Robert Dietz. “Still, the overall actions on tariffs in recent weeks have had a negative impact on builders, as 78% reported difficulties pricing their homes recently due to uncertainty around material prices.” 

The Washington Post recently reported that the Trump administration has made major changes to tariff policy more than 50 times since Jan. 20. 

Each month, NAHB/Wells Fargo surveys builders, asking them to rate single-family home sales over the next six months as good, fair or poor. The NAHB noted that 90% of the responses in this month’s survey were tabulated before the May 12 announcement that the United States and China agreed to cut tariffs for 90 days for trade negotiations. 

The survey also asks builders to rate traffic of prospective homebuyers and other topics as high, average or low. Scores are then calculated, and any number above 50 indicates that more builders view market conditions as good/high than poor/low. 

In May, builder confidence in the market for newly built single-family homes fell six points to 34. The index charting current sales conditions fell eight points to 37, while the component measuring sales expectations in the next six months slid one point to 42, and the gauge charting prospective-buyer traffic fell two points to 23.  

The survey also showed that 34% of builders cut home prices in May, compared to 29% in April. The average price reduction was 5%, the same as April. The use of sales incentives was also unchanged from the previous month, at 61%. 

The three-month averages for regional Housing Market Index scores were down across the board, with the Northeast falling three points to 44, the Midwest dipping one point to 40, the South decreasing two points to 37 and the West sliding two points to 33.