The nation’s homebuilders continue to face weakening demand as potential buyers grow concerned about the broader economy, leading builders to slash prices at the highest rate seen in three years, according to the latest monthly builder confidence survey from the National Association of Home Builders (NAHB).
Builder confidence edged up 1 point to 33 in July on the NAHB index—a slight improvement but still firmly in negative territory, as any reading below 50 signals pessimism. The index was at 41 this time last year and has remained negative for 15 consecutive months.
This modest boost came after the recently passed budget act, which provided tax relief for households, homebuilders, and small businesses. However, mortgage rates have stayed elevated and within a narrow range for several months.
“While this new law should provide economic momentum after a disappointing spring, the housing sector has weakened in 2025 due to poor affordability conditions, particularly from elevated interest rates,” said Buddy Hughes, NAHB chairman and builder from Lexington, North Carolina.
Reflecting these challenges, 38% of builders reported cutting prices in July—the highest share since the NAHB began tracking this in 2022. In comparison, only 29% were reducing prices in April. The average price cut held steady at 5%, a level consistent since November.
Builders have also been offering mortgage rate buydowns to attract buyers, which have squeezed their margins—though not as sharply as outright price reductions.
“Should the public builders supplement mortgage rate buydowns with more outright price reductions they would likely experience a larger negative gross margin and EPS drag as they would be unlikely able to offset the margin drag with increased volumes and SG&A leverage,” said Jonathan Woloshin, real estate and lodging analyst at UBS.
Within the NAHB index, current sales conditions ticked up 1 point to 36, and sales expectations for the next six months rose 3 points to 43. Meanwhile, buyer traffic declined 1 point to 20, hitting its lowest level since late 2022.
“Single-family housing starts will post a decline in 2025 due to ongoing housing affordability challenges,” noted Robert Dietz, NAHB chief economist. “Single-family permits are down 6% on a year-to-date basis and builder traffic in the HMI is at a more than two-year low.”
Regionally, builder sentiment was strongest in the Northeast, rising 2 points; flat in the Midwest; and fell further in the South and West, where confidence remains weakest.
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