The housing market weakness is expected to persist, possibly worsened by a general uncertainty regarding policies. Lennar, a homebuilding company, reported that tariff and immigration policies have not directly impacted their costs or labor yet, but they are keeping a close watch on the situation.

The chairman and co-chief executive of Lennar expressed concerns about the combination of high home prices and mortgage rates dampening demand. Stuart Miller highlighted in an earnings call that mortgage rates have remained high for an extended period, leading to a sustained weakness in the housing market and a notable decrease in actionable demand.

Investors were unsettled by this news, causing a 4% decline in Lennar's shares. Despite a fundamental demand for housing, a significant portion of the population is unable to afford homes due to the substantial price increase (45% since February 2020) and relatively high 30-year fixed mortgage rates (currently at 6.67%). Factors such as employment uncertainty and potential federal government layoffs are further contributing to consumer unease.

Consumer confidence is dwindling, resulting in a reduced sense of urgency among potential homebuyers. This is evident in the declining sales figures for existing and new homes, even with efforts by homebuilders to stimulate demand through mortgage rate incentives. Lennar remains positive about long-term prospects but acknowledges that demand recovery hinges on mortgage rates stabilizing, a factor with an uncertain timeline.

In addition to economic concerns, uncertainties surrounding tariff and immigration policies are looming. According to co-CEO Jon Jaffe, Lennar has not experienced cost impacts from tariffs or labor shortages due to deportations yet, but they are actively monitoring and discussing these issues with their industry partners.