6 charts that show storm clouds brewing over the spring homebuying season

The housing market is facing unprecedented uncertainty and volatility headed into the spring buying season. Recent reports and data signal that the impacts are setting in.

Homebuilders D.R. Horton and KB Homes held earnings calls this week, and the results aren’t great. In the first quarter of 2025, KB Homes took a $334 million loss in cash resulting from operations. Net sales orders and home sales revenue at D.R. Horton dropped by 15% and 15.2%, respectively.

The March new construction report from the U.S. Census Bureau was similar. Single-family permits fell 2% compared to February. Single-family starts fell by 14.2%, the largest monthly decline since April 2020.

Builders are aware of the challenges. The April reading of the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index was 40. While that’s a point higher than March, anything below 50 is considered pessimistic.

More alarming is that 60% of builders say their material costs have gone up by an average of 6.3% this year, adding $10,900 to the cost to build a single-family home.

There’s no secret as to why that’s happening. President Donald Trump’s tariff roller coaster has shocked and confused business leaders across all industries — and construction is no different. Trump has twice let a 25% tariff on Mexico and Canada take effect, only to pause it shortly afterward.

The new global tariff regime announced by the president on April 2 — or “Liberation Day” — caused the stock and bond markets to tank. The damage compelled Trump to pause many of these tariffs not long after they began.

This would have been welcome news for homebuilders if not for the one country not included in the pause — China. Instead, the two countries are engaged in a tit-for-tat that’s pushed the effective tariff rate for Chinese imports into the U.S. to an astronomical figure of 147.5%.

According to NAHB, 27% of imports used in residential construction come from China, more than double that of the next largest trade partner, which is Mexico at 11%. Trump has also imposed a 25% tariff on all steel and aluminum imports.

While the pause on global tariffs gave equities in some industries room to recover, it wasn’t so helpful to homebuilders, whose stocks are down precipitously since Trump was inaugurated on Jan. 20.

And this is just on the supply side. A problem for the broader housing market is that consumers aren’t in a mood to dish out cash. A recent Redfin-commissioned survey revealed that 55% of Americans are less likely to make a major purchase this year because of Trump’s tariff policies.

The University of Michigan’s Consumer Sentiment Index for April dropped by more than six points. The plunge is tied to higher expectations for inflation over the next year.

On the KB Homes earnings call, executives acknowledged that as the year has progressed, “it became apparent that demand was softer than we expected.”

According to the Mortgage Bankers Association (MBA)’s weekly applications survey, mortgage demand dropped 8.5% for the week ending April 11, although the index remains up year over year.

There is a bright spot. While new construction sags and demand shrinks, home sellers have an optimistic view. A Realtor.com survey shows that 70% of potential sellers believe it’s a good time to sell. Altos data also shows new listings spiking on both a weekly and yearly basis. In some markets, these spikes are pronounced.

While this isn’t unusual in the spring and might be a signal that the market is operating as usual, there’s also reason to think that anyone looking to buy or sell a home is rushing into the market to get ahead of any forthcoming volatility or major policy changes.

There’s also the matter of mortgage rates. While a stock market sell-off usually pushes interest rates down, the opposite happened after April 2, as the rate on a 30-year fixed mortgage jumped from 6.69% to 6.83% in less than a week.

The storm clouds related to tariffs and other federal policy changes could part with a little more certainty. But the data from an increasing number of sources point to April showers, dampening what was previously expected to be a strong year for the housing market.