Confidence among US homebuilders declined in March to its lowest level since August, weighed down by concerns over tariffs, rising construction costs, and economic uncertainty as the spring

home-selling season approaches.

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index dropped three points to 39, missing all forecasts in a Bloomberg survey of economists.

Indicators tracking current sales of single-family homes and buyer traffic also slid to their weakest levels since late 2023. However, builders' expectations for the next six months remained steady at 47.

"Builders continue to grapple with high material costs, compounded by tariff challenges and ongoing supply-side issues such as labor shortages and limited lot availability," said NAHB Chairman Buddy Hughes, a builder and developer from Lexington, North Carolina.

Optimism within the industry had surged following Donald Trump’s election, as homebuilders anticipated regulatory rollbacks and economic growth. However, rising tariffs now pose a significant challenge, particularly by increasing lumber costs, which could keep home prices elevated.

On a positive note, mortgage rates have declined for six consecutive weeks, reaching their lowest level this year, according to the Mortgage Bankers Association.

The NAHB survey found that builders estimate tariffs could add approximately $9,200 to the cost of a new home, according to chief economist Robert Dietz.

Additionally, more builders are resorting to price cuts to attract buyers. In March, 29% of respondents reported reducing prices, up from 26% the previous month. The average discount remained at 5%, and 59% of builders continued to offer sales incentives.

Confidence declined across all four US regions, with the West seeing its lowest reading since December 2023.