Home builders are feeling increasingly glum about business prospects this year, according to survey data released Tuesday by the National Association of Home Builders (NAHB) and Wells Fargo.

The Housing Market Index (HMI), a measure of builder sentiment, fell to a reading of 32 in June, down two points from May. Since 2012, the index has dipped lower than that on only two occasions: December 2022, when it reached 31, and April 2020, when it nosedived more than 40 points to a reading of 30 at the onset of the COVID-19 pandemic.

The HMI index is derived from a survey of home builders that gauges sentiment on current single-family home sales and expectations for the next six months. It also asks builders to rate foot traffic of prospective homebuyers. Any reading under 50 indicates more builders view market conditions as negative than positive.

“Rising inventory levels and prospective homebuyers 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,” NAHB Chief Economist Robert Dietz said in a press release. “Given current market conditions, NAHB is forecasting a decline in single-family [housing] starts for 2025.”

NAHB Chairman Buddy Hughes noted in a statement that elevated mortgage rates and economic uncertainty surrounding the Trump administration’s tariff policies are resulting in potential homebuyers “increasingly moving to the sidelines.” He observed that many builders are responding to depressed demand by cutting home prices.

The June survey showed that 37% of builders reported cutting prices this month, which is the highest percentage since the association began tracking that metric in 2022. Last month, 34% of builders said they cut home prices, while just 29% reduced prices in April. Meanwhile, 62% of builders used some form of sales incentive in June, up 1% from May.

Regionally, builders in the Western U.S. are the most pessimistic, with the HMI for that region falling four points this month to 28. The South dipped three points to 33, while the Northeast declined one point to 43. Builder sentiment in the Midwest rose one point in June, though it still sits at a gloomy mark of 41.