US homebuilder sentiment remains subdued amid affordability challenges

WASHINGTON, Feb 17 (Reuters) – U.S. homebuilder sentiment deteriorated in February, weighed down by persistently high land and construction costs as well as still-elevated house prices relative to incomes that are keeping prospective buyers on the sidelines, a survey showed on Tuesday.

The National Association of Home Builders/Wells Fargo Housing Market index eased one point to 36 this month, remaining below the 50 break-even point for 22 straight months.

Economists polled by Reuters had forecast the index climbing to 38. 

Confidence has remained depressed despite attempts by the Trump administration to make housing more affordable, including purchases of mortgage-backed securities and banning institutional investors from buying single-family homes.

“Builders reduced their expectations for future sales as buyers report affordability challenges, which is contributing to declining consumer confidence for the overall economy,” said NAHB Chairman Buddy Hughes. 

“While the majority of builders continue to deploy buyer incentives, including price cuts, many prospective buyers remain on the sidelines.”

President Donald Trump’s sweeping tariffs have raised prices for building materials and appliances, while his immigration crackdown, including raids at construction sites, has undercut labor supply. Building lots are also scarce. 

Soft housing demand has led to an overhang of unsold new homes, another challenge confronting builders. 

Though the share of builders reporting cutting prices fell to a nine-month low of 36% from 40% in January, the NAHB said the average price reduction remained at 6%. 

The share using incentives was unchanged at 65%. It was the 11th consecutive month that this share has exceeded 60%.

The survey’s measure of current sales conditions was steady at 41, while its gauge of future sales fell three points to 46. A measure of prospective buyer traffic dropped two points to 22.

“The solution for the housing market is the enactment of policies that will bend the construction cost curve and enable additional supply of attainable housing,” said NAHB chief economist Robert Dietz. “On the positive side, easing inflation should continue to allow lower interest rates for mortgages and builder loans.”

(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama )