For over a year now, the mood among homebuilders has been pretty bleak. Builder confidence has languished in negative territory for fifteen consecutive months, a trend that underscores just how unforgiving the housing market has felt for anyone with a stake in new residential construction.
While July brought a faint glimmer of change, it was more of a murmur than a rallying cry. Confidence among builders moved up by just a single point, a move widely credited to the recent passage of the federal budget bill. The gesture is notable, not only because the budget debate has been a perpetual fixture in business headlines, but also because the homebuilding industry has been especially hungry for signs that conditions might be stabilizing.
Despite this slight uptick, the outlook remains pretty dreary when measured by long-term historical standards. July’s rise lifts builder sentiment to just a notch above its recent low, but still deep within pessimistic territory and dramatically below what the industry would consider a healthy market.
For anyone tracking the story by the numbers, the latest data from the National Association of Home Builders shows that the confidence index for July ticked up by a point, landing at 33. That’s better than last month, but still squarely in caution mode, far from the threshold of 50 that would signal optimism among builders. Builders and analysts alike say this persistent caution is about more than just budget negotiations. High mortgage rates, economic and policy uncertainty, and a general sense of caution among prospective buyers all continue to put a damper on any momentum that might otherwise come from legislative progress.
One of the clearest indicators of market hesitancy can be found in buyer traffic metrics. This July, the traffic gauge, which tracks how many people are actively searching for new homes, dropped by a point to a reading of 20. That may not sound dramatic at first, but it marks the lowest level seen since the end of 2022. In short, there simply aren’t enough buyers venturing out to look at new homes. For builders with properties on the market, that means tougher choices around pricing and incentives, and for some buyers, it signals opportunities, if they’re willing to brave a climate filled with economic unknowns.
Many builders are countering slow traffic with ever more aggressive price cuts and incentives. Think mortgage buydowns, help with closing costs, and even extra options thrown in for good measure, all in hopes of nudging would-be buyers off the fence. However, multiple industry experts, including Oliver Radvin at John Burns Research and Consulting, say even these moves haven’t been enough to reverse the overall sluggishness.
The lack of buyers isn’t just about high prices, either. Stubbornly high mortgage rates have knocked out more buyers than any single factor, but persistent uncertainty about tariffs, employment, and the wider economy is causing many would-be buyers to take a wait-and-see approach. Some are worried about future affordability, while others simply don’t want to make a major purchase when headlines are filled with questions about economic direction.
Given all this, few observers expect a dramatic change in outlook for the rest of 2025. As Robert Dietz, chief economist at the National Association of Home Builders, noted, “Single-family housing starts will post a decline in 2025 due to ongoing housing affordability challenges.” Builders are essentially in the business of balancing hope and reality right now, and for the time being, reality continues to weigh the heaviest on their scales.
So while July’s bump in confidence is something, it’s far from a sign of rebirth. For now, builders, buyers, and everyone watching the market are still waiting for the real tide to turn.
