Markets shift and forecasts change, sometimes on a dime. Certainly, the first half of 2025 has proven this to be true. Belco believes that in uncertain times, the ability to decode emerging patterns and adapt strategically is what generates lasting success. This year, there have been several back-to-back impedances creating market turbulence. From tariff debates and dumping duties on imported lumber to unprecedented labor and jobs issues, our optimistic forecasts from late 2024 are now a thing of the past. But we are committed to doing more than surviving the unexpected downturns. As industry leaders, Belco always aims to empower our partners with data-driven insights, enabling proactive decision-making that can transform our collective challenges into competitive advantages. Let’s get into the brass tacks.
Market Overview: Continued Downturn
Recent numbers from the US Census Bureau and LBM Journal continue to tell a tough story. Single-family housing starts have dipped nearly 5% month-over-month, hitting the lowest rate since July 2024 at 883,000 units. That is almost 10% from a year ago. In terms of monthly activity on the national level, year-to-date (YTD) starts are down nearly 7%, with permits also declining by 5.5% compared to the same timeframe last year. This downturn is compounded by an overage of completed but unsold inventory lingering in the slow-moving market.
Regional Market Pulse: Navigating the South & West
As Danielle Hale, Chief Economist at Realtor.com observes: “In the South and West, we’re seeing clear signs of buyer-friendly conditions—more price cuts, rising de-listings, and longer market times.” Mortgage rates remain elevated but stable at 6.74% (as of July 24), slightly higher than earlier this month, reinforcing a cautious market environment. These two regions vary slightly, but both indicate ongoing caution:
South
- Single-family housing starts have taken a dip, coming in at a SAAR reading of 483,000 units, down 5% from May, and nearly 19% from this time last year. While these numbers are challenging, they’re reflective of market caution rather than panic.
- Permitting is also slower, down 3.21% from last month and just over 8% from a year ago.
- Year-to-date, starts are at 276,500 units, down roughly 12% from last year. Permit activity echoes this cautious position, down about 7% compared to the same period in 2024, hinting that slower activity remains in the cards moving through the rest of the year.
West
- In the West, the pace of single-family starts is also trending down slightly, at 195,000 units, a 6.25% decline from last month, and down around 3% compared to a year ago. While certainly not ideal, it’s notable that this drop is less severe than in other regions.
- Permits are down almost 7% month-over-month and a staggering 14.63% year-over-year.
- Year-to-date, starts are at 112,600 units, just under a 2% dip compared to 2024. Permit activity, though down nearly 8%, is a sign that builders will likely continue adopting a conservative approach for the coming months.
Builder Confidence: Small Gains in the Long Game
July’s NAHB/Wells Fargo Housing Market Index (HMI) nudged up to 33, reflecting slightly improved sales expectations due to the extension of the 2017 tax cuts. Yet widespread challenges persist, with 38% of builders cutting prices (a record high since tracking began in 2022) and 62% of builders continuing to offer sales incentives to move inventory.
Further summarized from the NAHB:
- Current sales conditions rose by 1 point to 36
- Sales expectations over the next 6 months popped up 3 points to 43
- Traffic of prospective buyers fell by a point to 20
The data suggests builders are cautiously optimistic about the next six months, even as they navigate today’s challenging reality with aggressive pricing and incentives.
Moreover, the HBS Dealer: Housing and Remodeling Report offers a helpful look into some difficult decisions builders are faced with in this recessive market. With finished inventory remaining high, builders are vigilant with price-adjusting strategies, even resorting to material “trade-down” in some cases. Essentially, that means that some builders are choosing to swap out more premium building materials for less costly options, sacrificing premium quality for a more sellable home in terms of price.
Belco Leadership on Creating Opportunity
Like so many of you have experienced, when Belco planned for 2025, builder confidence was higher, and the market outlook was finally more robust after a sluggish 2024. But, as Belco President Mike Richardson emphasizes, “We, our competitors, and our builder partners need to actively create our own wins.” So that is what we are doing.
Senior Business Analyst, Julie Bradley-Rowan goes on to say, “While the economic climate has undoubtedly shifted, our resilience hasn’t. As always, we rely on informed strategies, agility, and collaborative strength to navigate and succeed even in uncertain times.”
Together, let’s build our future, creating opportunities and defining our victories!
