The Trump economy isn’t sitting well with many of the nation’s home builders, who are facing mounting challenges just as the country continues to grapple with a shortage of affordable housing.
According to new data from the National Association of Home Builders, overall builder confidence remains weak. Their closely watched Housing Market Index only crept up by one point in April to 40 a figure that still indicates negative sentiment, as anything below 50 suggests the majority of builders are pessimistic. And that slight increase was recorded before the latest mortgage rate hike took effect.
For most builders, the costs of doing business are rising fast. Sixty percent reported their material expenses have increased by an average of 6.3% so far this year, which translates to an added $10,900 in cost for each single-family home built. That burden is getting passed on to potential homebuyers, many of whom are already priced out of the market.
Meanwhile, homes are now selling at the slowest rate in six years. Real estate site Redfin reported that homes going under contract in March were sitting on the market for 47 days on average more than double the pace of the COVID-era housing boom. While home prices have only increased by 2.5% year-over-year, the slow growth is cold comfort to builders who are watching their margins shrink.
The broader economic picture is even more concerning. President Trump’s aggressive “Liberation Day” tariffs and unpredictable trade policies triggered a selloff in U.S. Treasury bonds, pushing mortgage rates higher just as they had begun to ease. The average 30-year mortgage rate now hovers just below 7%, according to Mortgage News Daily well above levels seen just a few months ago.
For builders and buyers alike, rising interest rates combined with inflation and economic uncertainty are chilling the housing market. On top of that, looming immigration crackdowns could threaten an industry that relies significantly on undocumented labor for construction.
Across the housing sector, frustration is growing. Builders say the costs are unsustainable, buyers are backing away, and economic policies out of Washington are making things worse, not better. That’s bad news for President Trump, who promised to revive the economy but is instead facing backlash from a key segment of the business community. Many in the industry and even prospective homeowners are expressing increasing dissatisfaction, signaling that housing may become another political liability for the administration.