Home builder sentiment falls sharply

The NAHB May builder sentiment index dropped a sharp 6 pts to 34 from 40, well under the estimate of no change and matches the weakest since December 2022. Most of the decline came in the Present Situation which declined by 8 pts while Expectations were down 1 pt to 42. Prospective Buyers Traffic remains depressed and a bit more so at 23 vs 25, so less than half the breakeven of 50.

The problem in housing remains both a supply and demand issue. The NAHB said “The spring home buying season has gotten off to a slow start as persistent elevated interest rates, policy uncertainty and building material costs factors hurt builder sentiment in May.” Also, “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.”

This data came before the China tariff pause/deep breath though.