February Home Building Trends Decline as Buyer Uncertainty Grows
March 20, 2025
Highlights of the most recent HomeSphere/BTIG State of the Industry Report show a shift in home builder sentiment as February showed weaker sales and traffic trends compared to January. Fewer builders are seeing positive year-over-year performance, and more are facing declines, signaling growing challenges in the housing market. Increased buyer hesitancy, driven by macroeconomic uncertainty and concerns about tariffs, is influencing pricing strategies and overall market conditions.
Homebuilders saw weaker year-over-year sales and traffic trends in February compared to January. Fewer builders reported positive sales (29% vs. 31% last month), while more saw declines (28% vs. 22%). Traffic comparisons also worsened, with 37% reporting higher traffic (down from 46%) and 24% reporting lower (up from 21%). Sales performance relative to expectations remained stable, but traffic expectations weakened.
Fewer builders raised base prices for the first time in five months, while more increased sales incentives (19% vs. 15%), deviating from typical seasonal patterns. State-level results were mixed, with KY and OR performing well, while MN and VA were more pessimistic. Among major markets, FL, GA, and TX showed mixed results, while CA was more negative. Overall, February saw deteriorating activity trends, with builder concerns tied to macroeconomic uncertainty, particularly regarding tariffs.
The latest NAHB/Wells Fargo Housing Market Index (released March 17, 2025) fell to 39.
Highlights from the latest State of the Industry Report
Sales & traffic. Overall, builders reported worse sales and traffic trends relative to January. 29% of respondents reported yr/yr increases in sales orders, down from 31% sequentially, and 28% saw a yr/yr decrease in orders in February vs. 22% in January. 37% of builders reported an increase in yr/yr traffic at communities while 24% saw a decline vs. 46% and 21%, respectively, last month.
Sales & traffic relative to expectations. Business relative to expectations declined somewhat in February compared to January, but more builders still see sales ahead of plan than behind. 31% of respondents saw sales as better than expected (29% in January), but 19% saw sales as worse than expected vs. 15% last month, resulting in a change in the better-minus-worse spread to +12 from +14. 29% of builders
saw traffic as better than expected, and 18% saw traffic as worse than expected (a better-minus-worse spread of +11). This compares to 36% better and 15% worse last month (a spread of +21).
Base pricing & incentives. The level of builders who decreased base prices in February compared to January was lower; the percentage of builders who increased incentives rose month-over-month. 32% of builders reported raising either "most/all" or "some" base prices, down from 34% last month; 12% reported lowering "most/all" or "some" base prices, down sequentially. 4% reported decreasing "most/all" or "some" incentives.
Regional color / interest-rate drop impact. While the small number of responses per state often makes us reticent to reach conclusions about specific markets, we note that KY and OR builders were almost uniformly positive on their market. MN and VA builders reported weaker conditions. See Exhibit 8 for anecdotal builder commentary
HomeSphere/BTIG State of the Industry Report
HomeSphere partners with the global investment bank BTIG to create a monthly report to provide our builders and manufacturers with exclusive and timely insights about the market.
To compile the report, we survey HomeSphere’s 2,700+ regional and local home builders about sales, traffic, pricing, labor costs and other key industry metrics.
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