Yikes!

Let me preface this by saying no one expected an upbeat read on US homebuilder sentiment for June. Everyone knows builders are vexed, frustrated and, it’s probably fair to say, dejected.

But even in the context of low expectations, a 32 print on the NAHB’s gauge of builder moods counted as a downside surprise. Consensus expected 36.

There are just two worse readouts looking back more than a dozen years: December of 2022 and April of 2020, at the onset of the pandemic. A forward looking measure of single-family sales and a metric which tracks prospective buyer traffic both slipped to their lowest levels since late 2023.

This bodes poorly for single-family starts, although the NAHB headline and the government’s housing starts series haven’t always tracked as closely as they “should” post-pandemic. When the people swinging the hammers are pessimistic about the prospects for profitable home-building, the read across for new construction’s not great.

It’s probably fair to call the spring home-buying season a bust in the US. Prices are stubborn near record highs and mortgage rates are stuck near 7%. Anyone who could’ve bought under those conditions already did. In 2025, the buyer pool’s comprised of highly price-sensitive shoppers for whom the math really doesn’t work. They need every basis point on the rates side and they need sellers to play ball. Otherwise, they simply can’t get the financing.

Pervasive macro ambiguity and erratic policy turns from a wholly unpredictable White House aren’t helping. “Buyers are increasingly moving to the sidelines due to elevated mortgage rates and tariff and economic uncertainty,” NAHB Chairman Buddy Hughes remarked, noting that builders are increasingly prone to price cuts in a desperate attempt to clear inventory.

As the figure above reminds you, there’s a glut of unsold new construction in America. And, to reiterate a familiar talking point, that inventory has a carrying cost.

According to the NAHB, 37% of builders cut prices this month, the most since the survey started tallying the figure “way” back in 2022. Nearly two-thirds of builders resorted to some manner of incentives.

The situation’s acute enough now that the NAHB’s calling for a decline in single-family starts for the year. On Tuesday, the association’s chief economist Robert Dietz said “rising inventory levels and prospective home buyers who are on hold waiting for affordability conditions to improve” point to lower prices going forward.

According to Redfin, just 28% of homes are selling above asking in America today. As Dana Anderson noted, “that’s the lowest level for this time of year since 2020, when the start of the pandemic ground the housing market to a halt.”