Regional Homebuilder Sentiment: Northeast Leads Despite Largest Supply Gap

May 16, 2025

The latest Housing Market Index reveals homebuilder sentiment has decreased across all U.S. regions in May 2025, with the Northeast paradoxically maintaining the highest confidence levels despite facing the most severe supply challenges. This regional dichotomy presents a complex picture for real estate professionals navigating local market conditions.

Regional Builder Confidence Analysis

Data from the National Association of Home Builders shows distinct regional variations in builder confidence levels:

  • Northeast: Leads with highest sentiment despite a 1.2% increase in its housing supply gap—the only region where the gap expanded in 2024

  • Midwest: Maintains moderate builder confidence with strong potential in affordable markets including Ohio, Indiana, and Tennessee

  • South: Produced 751,000 housing starts in 2024—enough to potentially close its supply gap within three years at current rates

  • West: Experienced a 9.4% sales decline in March 2025, yet maintains the highest median price point at $621,200 (2.6% above 2024)

Supply Gap Progress By Region

The regional housing supply situation shows significant divergence, with the South and West making substantial progress while the Northeast falls further behind:

  • South: Supply gap reduced by 24.9% in 2024

  • West: Supply gap reduced by 13.4% in 2024

  • Midwest: Minimal reduction in housing gap

  • Northeast: Supply gap increased by 1.2%, creating further pressure on home prices

Strategic Implications For Real Estate Professionals

This regional disparity creates targeted opportunities for investors and professionals focusing on specific markets. The South continues demonstrating the strongest fundamentals with its combination of strong production and improving supply-demand balance.

For real estate professionals, these regional housing trends signal the importance of location-specific strategies rather than national approaches. With all regions showing recent sentiment declines but vastly different supply conditions, market outcomes will likely diverge significantly through 2025.