by Amid rising costs, many builders also are cutting prices in order to stay competitive
WASHINGTON — Despite elevated mortgage rates and economic uncertainty relating to fuel prices and other rising expenses, builder confidence rose slightly in May, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index released Monday.
The index said that builder confidence for newly built single-family homes rose three points to 37. A month earlier, it had fallen to 34, which was the lowest level since September 2025.
“The housing market remains soft as higher mortgage rates, rising gas prices and economic uncertainty related to the war in Iran continue to dampen buyer demand,” said NAHB Chairman Bill Owens, a homebuilder and remodeler from Worthington, Ohio. “However, efforts in the House to modify the 21st Century ROAD to Housing Act could increase the nation’s housing supply and help ease builder concerns.”
The ROAD to Housing Act (H.R. 6644 / S. 2651) has been described as a bipartisan legislative package designed to combat the housing crisis and lower costs by expanding supply and reducing regulatory burdens.
Based on three-month moving averages for regional HMI scores, the Midwest registered a one-point gain to 43, the Northeast rose one point to 42, the South held constant at 35 and the West fell one point to 28.
An HMI index gauging current sales conditions rose three points to 40 from April to May, the index measuring future sales increased three points to 45 and the index charting traffic of prospective buyers posted a three-point gain to 25.
NAHB Chief Economist Robert Dietz noted that 62% of builders said that suppliers have increased building material costs because of higher fuel prices.
“Energy costs make up approximately 4% of residential construction material input and service costs,” Dietz noted. “With near-term economic risks elevated, 70% of builders reported challenges pricing homes given uncertainty about material costs.”
Yet to remain competitive and also move inventory of new homes, builders are also continuing to cut prices, albeit at a slower pace. The survey showed that 36% of builders cut prices in April, down from 37% in March, with the average price reduction being about 5%, which the survey said also was down from 6% in March.
Some 60% of those surveyed said they used sales incentives, which was down from 64% in March and also the 13th consecutive month it has been 60% or higher.
The use of sales incentives is good news for consumers facing higher costs in other areas. By cutting prices, buyers can afford more house or lower the cost of a monthly mortgage, which in turn allows them to more easily afford other necessities such as furniture and appliances.
Long-term financing also helps them afford more furniture or at least stay within budget based on what they plan to spend. Many of those offers will be available throughout the upcoming Memorial Day sales weekend and beyond as retailers try to get more customers in the door and close on sales of product to make way for new goods to continue promoting through the July Fourth holiday weekend and throughout the typically slower summer months.
