US homebuilder sentiment ticks up but tariffs weigh on outlook

US homebuilder confidence barely rose this month on a pickup in current sales, though demand expectations stumbled to a more than one-year low and prices of construction materials are climbing on the heels of higher tariffs.

A gauge of overall conditions from the National Association of Home Builders and Wells Fargo rose 1 point to 40 in April, hovering near some of the lowest levels since late 2023. The median estimate of economists surveyed by Bloomberg called for a reading of 38.

The index’s components, however, were mixed. Builder expectations for sales in the next six months slipped 4 points to 43, reaching its lowest level since November 2023. Meantime, measures of present sales of single-family homes and traffic of prospective buyers each ticked up slightly.

The figures suggest new-home construction will continue to be restrained with challenges on both the demand and supply side. Buyers are contending with high prices and mortgage rates — which jumped to 6.81% last week — while builders now have the additional challenge of higher costs from tariffs.

The builders association estimates the tariffs enacted by President Donald Trump’s administration will boost the cost on contractors by $10,900 per home. Some 60% of builders reported suppliers have already raised prices of materials because of tariffs, or they’ve announced increases, NAHB said.

“Policy uncertainty is having a negative impact on home builders, making it difficult for them to accurately price homes and make critical business decisions,” NAHB Chief Economist Robert Dietz said in a statement.

Home prices are near the highest on record, and buyers struggling to afford new houses have grown accustomed to generous sales incentives, Bloomberg Intelligence analyst Drew Reading said in a note last week. In the NAHB survey, the share of builders reporting using sales incentives in April rose to 61%. The share reporting cutting prices was unchanged at 29%.

By region, builder sentiment in the South, the biggest home-selling region, fell 1 point to its lowest level since November 2023, and confidence in the Northeast dropped to a more than two-year low. It climbed in the Midwest and West.

The federal government will provide a look at the US new residential construction market on Thursday, when it releases housing starts data for March.