Home Builder Confidence Inches Up in July

Home builders gain optimism

The supply of for-sale housing, and lack thereof, is perhaps the biggest detriment to home buyers today.

Due to its cascading effect, the inventory scarcity drives up competition and then, prices. But could help be on the way?

For-sale properties are on the rise, but a leading indicator of housing inventory held near depressed levels in July despite a small gain.

Home builder confidence falls

Home builder sentiment ebbs and flows based on consumer demand, market conditions, shifting costs and supply chain status.

Every month, the National Association of Home Builders (NAHB) and Wells Fargo survey NAHB members to measure this sentiment on a 0-100 scale in their Housing Market Index (HMI) report. The survey comprises three components for single-family housing: current home sales, home sales over the next six months, and traffic of prospective buyers.

In July, builder confidence rose to a score of 33, up from 32 in June but down from 41 year-over-year.

“Single-family housing starts will post a decline in 2025 due to ongoing housing affordability challenges,” said Robert Dietz, chief economist at NAHB. “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.”

The table below shows the HMI scores from the last 12 months:

The three index components experienced mixed results month-over-month. Current sales increased to 36 from 35, sales in the next six months grew to 43 from 40, and prospective home buyer traffic dipped to 20 from 21.

Broken down regionally, home builders in the Northeast had the most optimism with a three-month moving average score of 45. Next came HMIs of 41 in the Midwest, 30 in the South, and 25 in the West.

“The housing sector has weakened in 2025 due to poor affordability conditions, particularly from elevated interest rates,” said NAHB Chairman Buddy Hughes.

What other indicators of housing inventory say

In June, active home listings increased 28.9% annually to a total of 1.086 million, according to Realtor.com.

Among the 50 largest cities in the U.S., Las Vegas saw a 77.6% yearly jump in active listing count, trailed by 63.6% in Washington, D.C. and 56.4% in Raleigh, N.C. Milwaukee experienced the smallest annual gain of 0.8%. Buffalo and New York City followed with growths of 8.1% and 9.7%, respectively.

For a look ahead, the Census Bureau and Department of Housing and Urban Development put out a joint Monthly New Residential Construction Report, with three leading indicators of housing inventory.

First, building permits hit a seasonally adjusted annual rate (SAAR) of 1.393 million in May. That figure decreased 2% month-over-month and 1% year-over-year.

Next, housing starts reached a SAAR of 1.256 million, down 9.8% monthly and 4.6% annually. Lastly, a SAAR 1.526 million houses were completed in May, 5.4% higher than April but 2.2% below May 2024.

The bottom line for home buyers

Between low affordability and not enough listings, home buying has been challenging for prospective borrowers.

If you’re a house hunter, it’ll be helpful to grab every advantage you can. Always be prepared so you can move fast, negotiate your mortgage rate, and see if you qualify for down payment and/or closing cost assistance.

If you’re ready to take the next step to homeownership, reach out to a local mortgage professional.