elevated mortgage rates and a volatile economic landscape continue to put pressure on consumers and, subsequently, the nation’s homebuilders.

In June, builder sentiment decreased by 2 points from May, reaching 32 on the National Association of Home Builders (NAHB)/Wells Fargo housing Market Index (HMI). A reading below 50 indicates negative sentiment. The index registered 43 in June 2024.

Despite expectations of a slight recovery fueled by recent tariff discussions and adjustments by the previous administration, analysts were met with disappointment.

The index has only recorded lower figures than June’s on two occasions as 2012: in December 2022, following a surge in mortgage rates from pandemic-era lows, and in April 2020, at the onset of the pandemic.

Among the index’s three components, current sales conditions dropped 2 points to 35, sales expectations for the next six months decreased 2 points to 40, and buyer traffic fell 2 points to 21, marking the lowest point for that metric since the close of 2023.

“Buyers are increasingly moving to the sidelines due to elevated mortgage rates and tariff and economic uncertainty,” said Buddy hughes, NAHB chairman and a homebuilder from Lexington, North Carolina, in a release. “To help address affordability concerns and bring hesitant buyers off the fence, a growing number of builders are moving to cut prices.”

The June survey revealed that 37% of builders had reduced prices, the highest percentage since the NAHB began tracking this monthly statistic three years ago. This represents an increase from 34% in May and 29% in April. The average price reduction has remained steady at 5% since late last year.

“Rising inventory levels and prospective home buyers who are on hold waiting for affordability conditions to improve are resulting in weakening price growth in most markets and generating price declines for resales in a growing number of markets,” said Robert Dietz, chief economist at the NAHB. “Given current market conditions, NAHB is forecasting a decline in single-family starts for 2025.”

The report follows quarterly earnings from