One number points down. Another holds steady. A national headline sounds alarming, while a regional signal points toward opportunity. That is the work right now: reading the whole market, not just the loudest part of it.
July’s Belco Bulletin reports a market still under pressure, but not without some movement. Affordability remains tight. Mortgage rates, elevated. Material costs continue to create issues across the building supply chain. And yet, beneath the surface, some signals deserve strategic attention.
At Belco, we watch these shifts closely because we don’t operate on assumptions and averages. Dealers, builders, and distributors make decisions market by market, project by project, and delivery by delivery. Great support starts with understanding what is really happening at the local level.
Heavy Headlines and the Details that Matter
July’s market snapshot is not light reading. The market is still under pressure, but that pressure isn’t one-dimensional. It depends on what you count.
Census reported new home sales at 580,000 SAAR in May, down 7.3% from April and 6.8% year-over-year. That figure counts closings (deals that actually funded). Zonda, which counts signed contracts rather than closings, showed 726,000 SAAR in May, up 0.8% from April and 1.7% year-over-year.
Both numbers are right. They are measuring different moments in the same transaction. A contract signed in May becomes a closing in August, or it doesn’t close at all. When contracts are rising while closings are falling, the space between them is where cancellations, financing failures, and stretched timelines live.
For dealers and builders, that gap is the number that matters. Contracts are what fill the production schedule. Closings are what confirm the schedule was real. Right now, the front of the funnel is holding, but the back isn’t, which means demand exists, but it’s more expensive to convert and slower to land than it was two years ago. Builders are already acting on that gap: single-family starts fell to 882,000 SAAR in May, down 6.7% from a year ago, as builders slowed groundbreaking rather than add to standing inventory they would have to discount.
Mortgage rates eased slightly from last year, with the 30-year fixed at 6.43% as of July 2, down from 6.67% a year earlier. That is not enough to unlock major affordability gains, but it shows the market isn’t frozen.
Builders are Moving and Carrying the Cost to Do It
Builder confidence remains under pressure. The June NAHB/Wells Fargo Housing Market Index fell to 35, keeping sentiment well below the neutral mark of 50. Builders also continue to rely heavily on incentives. In June, 62% of builders reported using sales incentives. Another 35% reported cutting prices.
Buyers are still there, but many need help crossing the affordability line. Builders are working harder to close deals. They are protecting traffic, protecting margin, and adjusting offers in real time.
Zonda Chief Economist Ali Wolf captured this shift clearly: “While incentives are still widely used today, builders are being more thoughtful about how they present them. A year ago, many builder websites almost felt like spam, with incentive pop-ups and advertised price cuts. Today, there’s more of a shift towards using incentives to close deals rather than to drive traffic.”
For dealers and builders, efficient execution is a top priority. Waste, delays, callbacks, and product uncertainty all carry more weight when margins are squeezed.
Affordability is the Shot Caller
Mortgage rates continue to intimidate demand. The 30-year fixed rate sat at 6.43% on July 2, according to Freddie Mac PMMS. That is slightly lower than a year ago, but still high enough to limit buying capacity.
As previously highlighted in Belco’s March bulletin, 70 million U.S. households cannot qualify for a $300,000 home under current conditions. This is a business and cultural reality that remains difficult to digest. Still, when buyers hit affordability ceilings, builders adjust. They rethink product mix. They manage spec inventory. They offer incentives. They look for savings that ideally skirt the weakening of quality and reputation. Materials still need to show up on time. Products still need to install cleanly. Trim still needs to hold up after the builder leaves the job. What we know at Belco is that the wrong shortcut inevitably costs more.
Material Cost Pressure Keeps Posting Up
Lumber futures climbed above $630 per thousand board feet in late June, hit an eight-month high, then eased toward $615 in early July, up roughly 6% from a year ago. Tariff policy is about to move, too. Preliminary antidumping and countervailing duty rates on Canadian softwood were cut from a combined 35.2% to 25.9%, effective August, though the 10% Section 232 tariff stays, leaving a 35.9% rate on Canadian imports. Relief on paper. Not as much relief in practice.
For dealers and builders, this can make planning hard. A long quote window is a bet that costs will hold. Right now they don’t. A project that penciled cleanly in June can lose its margin before the material reaches the yard, not because anyone estimated badly, but because the number moved underneath them.
While no supplier controls the cost environment, they can stay close to market movement, and communicate before a small issue turns into jobsite profit loss.
Regional Market HMI and Signals
The national housing picture matters, but regional data always provides the more relevant read.
On a three-month moving average basis, the June regional HMI readings were mixed. The Northeast rose two points to 44, and the Midwest held constant at 43, while the South fell two points to 33 and the West dropped one point to 27. No region is above the neutral mark of 50, but the spread between the Northeast and the West is a 17-point gap in builder sentiment.
Aside from the regional HMI averages represented in the table above, several markets showed meaningful movement in May. According to Zonda, LA/Orange County posted a 20.2% year-over-year gain in its Pending Sales Index, and Miami grew community counts 21.8% year-over-year.
Those are not small signals. At the same time, not every region is gaining ground. Portland posted a 9.3% year-over-year decline in active community count. The broader West continues to carry weaker builder sentiment. The South also remains soft, though closer to a mid-range reading than the more pronounced weakness in the West.
This is why broad national conclusions can be misleading, and why local conditions matter most. A slow national headline may still contain active pockets of demand. A positive signal uptick may still depend on incentives, pricing discipline, and careful inventory planning.
What We're Watching Now
The second half of the year will depend on a few key signals. First, if permits hold steady, the near-term pipeline may prove more resilient than headline starts suggest.
Second, even modest rate relief could help qualified buyers re-enter the market. Any rate increase could tighten demand again.
Third, if builder incentive use begins to decline, that may signal healthier demand. If incentives climb further, it could point to deeper softness.
Finally, tariff policy, lumber movement, and broader input inflation will continue to shape how builders and dealers manage price risk.
Bottom Line
July’s market is not easy, but it is legible. Single-family housing remains under pressure, but it has not lost all traction. Builders remain cautious, but they are still selling. Buyers are still largely boxed out, but demand has not vanished entirely. Accordingly, the strongest operators will watch the details, understand their local markets, and stay disciplined.
