Home builder confidence declined sharply in April as the Iran war squashed optimism that new-home construction could stage a modest recovery in the second half of 2026.
Updating their widely cited builder sentiment survey on Wednesday, the National Association of Home Builders (NAHB) and Wells Fargo jointly reported that outlooks on current new-home sales conditions declined four points from March to land at 37.
Meanwhile, sales outlooks for new builds over the next six months dropped seven points to 42 and builders’ outlooks for buyer traffic fell three points to 22. The overall Housing Market Index (HMI) slipped to 34 in April from 38 in March.
Robert Dietz, chief economist of the NAHB, noted in a separate market analysis published Wednesday that compounding price impacts on U.S. households from a range of Trump administration policies will likely reduce housing demand through the rest of this year.
“A multidimensional supply shock is weakening the U.S. economy, fueled by the delayed effects of the 2025 trade wars and tariffs, elevated oil prices, and persistent policy uncertainty,” said Dietz. “The housing market needs greater certainty and a reduction of headline risk to regain momentum.”
Economic anxieties linked to the Iran war have surpassed consumers’ tariff-related concerns from this time last year, when President Donald Trump announced “Liberation Day” tariffs that he later scaled back. Rising inflation fears have compounded elevated job anxieties, plunging consumers’ economic outlooks to record lows in early April.
The HMI, which separates majority-positive and majority-negative market sentiments on a scale from 0 to 100, has not crossed above 50 since April 2024. Slow buyer demand caused the home building sector to contract last year, as the industry posted lower sales and starts in 2025 than 2024.
Mortgage applications to purchase newly constructed homes spiked in March, according to the latest Mortgage Bankers Association data. However, the backlog of completed homes was more than 10% higher over the year in March, underscoring the reluctance builders have had in breaking ground on new projects absent firmer delivery signals.
The NAHB’s latest sentiment survey reveals home builders have continued the heavy use of sales incentives to help reduce that inventory backlog, though at a slightly lower pace than March.
Approximately 36% of home builders cut list prices in April, down from 37% the previous month. The size of the price cuts also declined to an average reduction of 5%, slightly lower than the 6% figure in March.
About 60% of home builders reported using sales incentives in April, down from 64% in March but “the 13th consecutive month this share has reached 60% or higher,” according to the NAHB.
