Home builder sentiment softened and U.S. new-home sales tumbled in March, bogged down by tariff shocks and stock market volatility.

Nearly 40% of U.S. home builders surveyed in March agreed that “demand is slower and causing concern,” according to the latest New Home Market Update from Zonda. That’s up from just 5% in March 2024.

The increasing pessimism among builders proved prescient, as actual new-home sales fell during the month. There were 650,355 new homes sold in March on a seasonally adjusted annualized rate, 3.2% fewer than a month earlier and down 11.5% year over year.

“The on-again-off-again tariffs, wild gyrations in the stock market, and volatility in mortgage rates are adding an extra layer of uncertainty for today’s home buyers. We are tracking to see if consumers can brush it off or decide to move to the sidelines for now,” said Ali Wolf, chief economist for Zonda and NewHomeSource.

Affordability issues have dogged buyers for the past few years. Data from the National Association of Home Builders (NAHB) indicates the cost of key building materials has climbed 34% since December 2020, far outpacing the rate of inflation. But new tariffs on lumber, steel, and aluminum could hurt affordability even more: the NAHB’s April Housing Market Index estimates tariffs could add $10,900 to the cost of a typical new home.

The unfolding tariff situation has also roiled stock and bond markets. The touchstone S&P and Dow Jones indexes have both fallen by 9% over the past month, coinciding with a sharp selloff of U.S. government bonds.

That has pushed mortgage rates higher. The average 30-year fixed mortgage rate rose to 6.83% for the week ended April 17, up from 6.62% the previous week. Per lender Freddie Mac, that was the biggest one-week jump in mortgage rates in almost a year.

What does it all mean for consumers? Though tariffs and mortgage rate hikes could boost the cost of new homes, builders are responding by cutting prices and offering incentives. Based on Zonda’s data, 32% of builders lowered prices in March, up from 21% of builders in February. The March price reductions were relatively subtle, however:

  • The average entry-level home price was $329,130 (down 0.7% YOY)
  • The average move-up home was priced at $519,375 (down 0.2% YOY)
  • Although the average price of a high-end home rose to $909,894, it was a marginal increase of just 0.9% YOY

Incentives continued to be popular in March, offered by builders on 56% of to-be-built homes and 74% of quick move-in (QMI) homes, which can likely be occupied within 90 days. According to Zonda, some builders have pivoted to QMIs to give buyers more options in markets where resale supply is tight. There were 34,079 QMIs nationally in March, an increase of 20.6% compared to a year earlier but almost 80% higher than 2019 levels.

Zonda’s March New Home Update is its first to include data on QMIs per community, a metric that tracks new-home supply in the context of actively selling projects. On a national basis there were 2.3 QMIs per community in March, up 25% from a year earlier yet 8% lower than the peak of 2.5 QMIs per community reached in 2022.