(Bloomberg) — Confidence among US homebuilders slumped in May to the lowest level since late 2023, as tariffs made it harder to price homes and anxious consumers dragged their feet on purchases.

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An index of overall market conditions from the National Association of Home Builders and Wells Fargo (WFC) slipped 6 points to 34 this month. That trailed all estimates in a Bloomberg survey of economists.

All three components that make up the index fell, with a measure of expected sales in the next six months sliding to an 18-month low. A gauge of present sales dropped to the lowest since late 2022, while traffic of prospective buyers was the weakest in 1 1/2 years.

“The spring home buying season has gotten off to a slow start as persistent elevated interest rates, policy uncertainty and building material cost factors hurt builder sentiment in May,” NAHB Chairman Buddy Hughes, a builder and developer from Lexington, North Carolina, said in a statement.

Builders face a host of challenges that include stubbornly high mortgage rates, faltering consumer confidence and government policy that risk further restraining housing demand. Builder sentiment fell in all four US regions in May.

President Donald Trump, who has pledged to remove burdensome regulations, has also imposed tariffs that the NAHB estimates could boost construction costs by $10,900 a home. However, a recent trade agreement with the UK and a reduction in tariffs with China are “a welcome development,” NAHB Chief Economist Robert Dietz said in a statement.

Nearly 80% of builders reported having difficulty pricing homes because of uncertainty around materials costs, Dietz said.

In May, 34% of builders reported cutting prices, the largest share since December 2023, NAHB said. The share of builders reporting using sales incentives was unchanged at 61%.

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