Homebuilders are feeling less optimistic about housing market conditions in February, as persistently high mortgage rates and tariffs weigh on present and future sales.

According to the newest National Association of Home Builders/Wells Fargo Housing Market Index, builder confidence in the market for newly built, single-family homes fell to its lowest level since September.

What You Need To Know

  • Homebuilders are feeling less optimistic about housing market conditions in February

  • Persistently high mortgage rates and tariffs are weighing on present and future sales

  • According to the newest National Association of Home Builders/Wells Fargo Housing Market Index, builder confidence in the market for newly built single-family homes fell to its lowest level since September

  • On a scale of 0 to 100, builder confidence fell 5 points in February to 42, with sentiment about current sales conditions, sales expectations in the next six months and prospective buyer traffic each falling compared with January

On a scale of 0 to 100, builder confidence fell 5 points in February to 42, with sentiment about current sales conditions, sales expectations in the next six months and prospective buyer traffic each falling compared with January.

Earlier this month. President Donald Trump said he would impose a 25% tariff on imports from Mexico and Canada. While the tariffs were delayed until March, Canada is the United States’ top source for imported lumber. Trump also imposed an additional 10% tariff on imports from China.

About 27% of residential construction materials come from China, 11% are from Mexico, and 8% are sourced from Canada, according to the U.S. Commerce Department's Bureau of Economic Analysis.

Last week, Trump removed the exceptions and exemptions on steel tariffs he first enacted in 2018 so that all steel imports are taxed at least 25%. He also increased aluminum tariffs from 10% to 25%.

About 1.5 to 2 tons of steel are used for every 1,000 square feet of residential construction, according to the NAHB.

“Through an executive order on his first day in office, President Trump made it a top priority to reduce housing costs and increase housing supply to ease the nation’s housing affordability crisis,” NAHB Chairman Carl Harris said in a statement last week. “The administration’s move to impose 25% tariffs on all steel and aluminum products imports into the U.S. runs totally counter to this goal by raising home building costs, deterring new development and frustrating efforts to rebuild in the wake of natural disasters.”

He said consumers will pay the price of the tariffs in the form of higher home prices.

The average U.S. home value is currently $355,328, according to Zillow — a 2.7% increase from a year earlier. Home prices have increased 47% since early 2020, when the COVID-19 pandemic ignited a home-buying frenzy.

The current rate on a 30-year fixed mortgage is 6.96%, according to Mortgage News Daily.