Builder confidence near post-pandemic lows

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1. Builder confidence near post-pandemic lows

Builder confidence fell sharply in May on growing uncertainties stemming from elevated interest rates, tariff concerns, building material cost uncertainty and the cloudy economic outlook.

• However, 90% of the responses received in May were tabulated prior to the May 12 announcement that the United States and China agreed to slash tariffs for 90 days to allow trade talks to continue.

Builder confidence in the market for newly built single-family homes was 34 in May, down six points from April, according to the National Association of Home Builders. This ties the November 2023 reading and is the lowest since the index hit 31 in December 2022.

2. Consumer sentiment hits second-lowest reading on record

Consumer sentiment fell to its second-lowest reading on record in May, inching down for the fifth straight month as the potential impacts of tariffs loom large in the American psyche.

• The University of Michigan’s consumer sentiment index ticked down to a reading of 50.8 in the first two weeks of May, according to preliminary results released Friday.

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4. Housing starts inch up 1.6% in April

Home building rebounded a little in April, regaining some of the ground lost in March. Housing starts, a gauge of new residential construction in America, rose 1.6% on month in April to 1.36 million, according to a Commerce Department report released Friday.

Residential permits, which offer some indication of the direction of home construction, by contrast, tumbled 4.7% on month in April to a rate of 1.41 million, a little behind the 1.45 million forecast by economists.

The increased housing starts comes despite American builders’ mood weakening on the back of mounting concerns over tariffs and the cost of building materials, according to this month’s housing market index by the National Association of Home Builders.

5. Fed: Buyer agreements don't lead to lower commissions

A Federal Reserve study analyzing three decades of data across 15 states concludes that mandatory buyer agreements have not driven down real estate commission rates.

While buy-side commissions have modestly declined—from about 3% in the 1990s to 2.7% today—the report attributes this to rising home prices and technological efficiencies, not policy changes.

Since the NAR settlement last August, buyer agent commissions have remained stable, with sellers still typically footing the bill.

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☀️ You’re all caught up. See you on Wednesday!

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