U.S. housing market activity continues to soften and, underscoring declining builder sentiment, the use of price incentives jumped in June. A decline in single-family housing starts is projected for 2025.

Builder confidence in the market for newly built single-family homes was 32 in June, down from 34 in May and below consensus for 36 in Econoday survey of forecasters. The index has come in lower only twice since 2012 31 in December 2022 and 30 in April 2020 at the start of the COVID-19 pandemic.

Buyers are increasingly moving to the sidelines due to elevated mortgage rates and tariff and economic uncertainty, the report said. To help address affordability concerns and bring hesitant buyers off the fence, a growing number of builders are moving to cut prices.

Thirty-seven percent of builders surveyed said they slashed prices in June, the highest percentage since NAHB began tracking this figure on a monthly basis in 2022. This compares with 34 percent in May and 29 percent in April.

The average price reduction was 5 percent in June, the same as every month since November 2024. The use of sales incentives was 62 percent, up one percentage point from May.

Rising inventory levels and prospective home buyers who are on hold waiting for affordability conditions to improve are resulting in weakening price growth in most markets and generating price declines for resales in a growing number of markets, the NAHB said. Given current market conditions, NAHB is forecasting a decline in single-family starts for 2025.

The index is seen better but still soft at 36 in June from a low 34 in May and 40 in April.

The housing market index is a monthly composite that tracks home builder assessments of present and future sales as well as buyer traffic. The index is a weighted average of separate diffusion indexes: present sales of new homes, sales of new homes expected in the next six months, and traffic of prospective buyers of new homes.

This report provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as the housing market index, investors can gain specific investment ideas as well as broad guidance for managing a portfolio. Whether the housing market index reflects new home sales or home resales, once a home is sold, it generates revenues for the realtor and the builder. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items home buyers might purchase. The economic"ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month. Since the economic backdrop is the most pervasive influence on financial markets, home sales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the existing home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.