Builder sentiment fell to its lowest level since September 2025 due to elevated mortgage rates, worsening labor shortages, and rising material costs, according to the National Association of Home Builders (NAHB).
Confidence in the market for newly built single-family homes fell three points in September to 32, according to the latest NAHB/Wells Fargo Housing Market Index (HMI).
With the three-point decline, the HMI remains below 40, as it has for 17 consecutive months. An index value below 50 indicates more builders view conditions as poor than good.
“Buyer traffic has weakened across much of the country, largely because of rising mortgage rates,” says NAHB chairman Bill Owens. “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 September HMI reflects sentiments collected by Zonda in its monthly survey of builders. In August, Zonda’s survey found 78% of builders reported demand was slower than expected even during a typically slower part of the year. The Zonda survey also highlighted a large jump in reported labor market disruptions and ongoing buyer hesitation.
According to the HMI, 38% of builders cut prices in September, up from 35% in the previous month. Additionally, two-thirds of builders reported using sales incentives during September, the highest share since December 2025.
“The HMI shows builder confidence at its lowest level since September 2025, as tight lending conditions and elevated land, labor, and construction costs persist,” NAHB chief economist Robert Dietz says. “Notable, 42% of builders rated current lot availability as poor and 38% as fair.”
The HMI is composed of three indices gauging builder perceptions of current sales conditions, sales expectations for the next six months, and traffic of prospective buyers.
The index measuring current sales conditions fell four points to 35, the gauge of future sales expectations dropped six points to 37, and the metric tracking prospective buyer traffic held steady at 23.
On a regional basis, the three-month moving averages for the HMI fell in the Midwest, the Northeast, and the South. The West index posted a one-point gain to a reading of 28. All four regional three-month moving averages also were below 50 in September.
