WASHINGTON – Confidence among America’s homebuilders has plummeted to its lowest level in seven months, according to new data released Wednesday. The decline comes as the ongoing conflict with Iran continues to drive up construction material prices and mortgage rates while creating broader economic uncertainty.
The National Association of Home Builders/Wells Fargo Housing Market Index fell four points to reach 34 this month – the weakest reading since September 2025. The index has now remained below the critical 50-point threshold for two full years. Industry analysts had predicted a smaller decline to 37.
“The year started with hopes for housing momentum growth, but risks with respect to the Iran war, energy costs, and declines for consumer confidence have slowed the market,” said NAHB Chairman Bill Owens.
The U.S.-Israel conflict with Iran has caused mortgage rates to climb after they had dropped considerably early this year due to expanded mortgage-backed securities purchases by government-sponsored entities Freddie Mac and Fannie Mae. Since mortgage rates typically follow U.S. Treasury yields, the Middle East tensions have sparked inflation concerns that pushed rates higher.
Federal data released last week revealed that monthly consumer prices rose by the largest margin in nearly four years during March. Consumer confidence also crashed to historic lows in April.
The benchmark 30-year fixed mortgage rate stood at 5.98% in late February just before the war began. By early April, it had surged to 6.46% and averaged 6.37% last week, according to Freddie Mac statistics. This decline in builder sentiment follows recent reports showing existing home sales dropped to a nine-month low in March.
NAHB chief economist Robert Dietz noted that 62% of builders have experienced suppliers raising building material prices due to increased fuel costs for gas and diesel. International oil prices have climbed more than 35% since the conflict started.
“Energy costs make up approximately 4% of residential construction material input and service costs,” said Dietz. “With near-term economic risks elevated, 70% of builders reported challenges pricing homes given uncertainty about material costs.”
These fuel-related cost pressures come on top of President Donald Trump’s broad tariffs on imported construction materials and appliances. Builders also face higher labor expenses as the Trump administration’s mass deportation efforts have reduced the available workforce.
As expenses mount, builders are reducing customer incentives. The percentage of builders cutting prices slightly decreased to 36% from 37% in March. Average price reductions fell to 5% from 6% the previous month. Sales incentive usage dropped to 60% from 64% in March.
The survey’s measurement of current sales conditions declined four points to 37, while future sales expectations fell seven points to 42. Prospective buyer traffic decreased three points to 22.
