The National
Association of Homebuilders (NAHB) announced on Thursday that its housing
market index (HMI) increased to 33 in July from an unrevised June reading of 33. This marked the first
improvement in builder confidence in three months.
Economists had expected the HMI to increase to 33.
A reading below
50 indicates more builders view conditions as poor than good.
According to
the report, two out of three major HMI components registered gains in early July. The component
tracking current sales conditions increased by 1 point to 36, while the
component charting sales expectations in the next six months climbed by 3 points
to 43. Meanwhile, the component measuring traffic of prospective buyers slipped
by 1 point to 20, the lowest reading since the end of 2022.
Commenting on
the latest report, NAHB Chairman Buddy Hughes noted that the passage of the One
Big Beautiful Bill Act provided a number of important wins for households, home
builders and small businesses. “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,”
he added.
Meanwhile, NAHB
Chief Economist Robert Dietz suggested that single-family housing starts would
post a decline in 2025 due to ongoing housing affordability challenges. “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,” he said.