U.S. homebuilder sentiment dropped to a seven-month low in March as tariffs on imported materials raised construction costs, a survey showed on Monday.
The National Association of Home Builders/Wells Fargo Housing Market Index dropped three points to 39 this month, the lowest level since August. Economists polled by Reuters had forecast the index at 42.
It has erased all the gains booked in the aftermath of President Donald Trump's election victory in November, mirroring similar losses in other confidence measures, including consumer sentiment.
Trump this month imposed and later suspended a 25% tariff on most goods from Canada and Mexico, which would have pushed up U.S. duties on Canadian lumber to nearly 40%. But tariffs on Chinese goods were raised to 20% and levies on steel and aluminum went into effect this month.
"Construction firms are facing added cost pressures from tariffs," said NAHB chief economist Robert Dietz.
"Data from the HMI March survey reveals that builders estimate a typical cost effect from recent tariff actions at $9,200 per home. Uncertainty on policy is also having a negative impact on home buyers and development decisions."
New home construction relies heavily on imported materials, including lumber, as well as goods like household appliances.
The survey's measure of current sales conditions fell to 43, the lowest level since December 2023, from 46 in February. A gauge of sales expectations in the next six months was unchanged at 47. Its measure of prospective buyers traffic decreased to 24 from 29 in the prior month.
