Higher mortgage rates, worsening labor shortages and rising material costs are weighing on builder sentiment.
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 (NAHB)/Wells Fargo Housing Market Index (HMI) released today.
Buyer traffic has weakened across much of the country, largely because of rising mortgage rates. 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.
The HMI shows builder confidence at its lowest level since September 2025, as tight lending conditions and elevated land, labor and construction costs persist. Notably, 42% of builders rated current lot availability as poor and 38% as fair.
The latest HMI survey found that 38% of builders cut prices in September, up 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, up from 63% in August and the highest share since 67% posted in December.
Derived from a monthly survey that NAHB has been conducting for more than 40 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
The index measuring current sales conditions in September fell four points to 35, the index gauging future sales expectations dropped six points to 37 and the index charting prospective buyer traffic held steady at 23.
Looking at the three-month moving averages for regional HMI scores, the Midwest dropped one point to 44, the Northeast fell five points to 39, the South fell one point to 31 and the West posted a one-point gain to 28.
The HMI tables can be found at nahb.org/hmi.