Home builder confidence improved ever so slightly this month, with the Housing Market Index (HMI) inching up to 33 after posting a reading of 32 in June, which was the third-lowest mark since 2012.
The HMI, based on a survey conducted by the National Association of Home Builders (NAHB) and Wells Fargo, gauges builder sentiment on current single-family home sales and expectations for the next six months. Any result under 50 indicates a general lack of builder confidence, and July’s dismal reading of 33 represents the 15th consecutive month the index has been in pessimistic territory.
The finalization of the GOP’s massive tax-and-spending package on July 4 may have an uplifting effect on home builder spirits, as it was widely seen as containing favorable provisions for the housing industry. But NAHB Chairman Buddy Hughes said in a press release that high mortgage rates continue to stall housing market momentum.
“The passage of the One Big Beautiful Bill Act provided a number of important wins for households, home builders and small businesses,” Hughes stated. “While this new law should provide economic momentum after a disappointing spring, the housing sector has weakened in 2025 due to poor affordability conditions, particularly from elevated interest rates.”
Builders in the West and South are the most pessimistic, with their respective regional HMIs clocking in at 25 and 29 in July. The Midwest registered a reading of 44, while the Northeast almost reached positive territory at 48.
Overall, the index measuring current single-family sales conditions gained one point in July to reach a level of 36. A separate metric that estimates foot traffic of prospective homebuyers fell one point to 20, its lowest mark since the end of 2022. The index gauging sales expectations for the next six months rose three points to 43.
Despite the improved builder outlook for the second half of the year, NAHB Chief Economist Robert Dietz was unequivocal in his belief that 2025 will go down as a tough year for the home building industry.
“Single-family housing starts will post a decline in 2025 due to ongoing housing affordability challenges,” Dietz said. “Single-family permits are down 6% on a year-to-date basis and builder traffic in the HMI is at a more than two-year low.”
