Washington, D.C.—Higher mortgage rates, labor shortages and rising material costs are weighing on builder sentiment, according to the National Association of Home Builders (NAHB).
Builder confidence in the market for newly built single-family homes fell three points to 32 in September, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
“Buyer traffic has weakened across much of the country, largely because of rising mortgage rates,” said Bill Owens, chairman of the NAHB and a home builder and remodeler from Worthington, Ohio. “Builders also continue to face higher material costs, rising gas and diesel prices and persistent labor shortages. In some markets, builders report that increased immigration enforcement is discouraging legal workers from reporting to job sites.”
Robert Dietz, NAHB chief economist, added, “The HMI shows builder confidence at its lowest level since September 2025, as tight lending conditions and elevated land, labor and construction costs persist.”
The pressure extends beyond buyer demand, with builders also reporting continued challenges tied to financing, land and construction costs.
“Notably, 42% of builders rated current lot availability as poor and 38% as fair,” said Dietz.
Builders increase incentives
The latest HMI survey found 38% of builders cut prices in September. That figure increased from 35% in August. The average price cut remained at 6% for the sixth consecutive month.
Meanwhile, 66% of builders reported using sales incentives in September. That increased from 63% in August and marked the highest share since December’s 67%.
NAHB has conducted the monthly HMI survey for more than 40 years. The index measures builder perceptions of current single-family home sales. It also tracks sales expectations for the next six months. Builders rate conditions as “good,” “fair” or “poor.” They also rate prospective buyer traffic as “high to very high,” “average” or “low to very low.”
NAHB uses those responses to calculate a seasonally adjusted index. A reading above 50 indicates more builders view conditions as good than poor.
Sales expectations decline
The index measuring current sales conditions fell four points to 35 in September.
The index measuring sales expectations for the next six months dropped six points to 37. Prospective buyer traffic held steady at 23.
Regional three-month moving averages also showed declines in most areas.
The Midwest fell one point to 44, while the Northeast dropped five points to 39. The South declined one point to 31. The West gained one point to 28.