The sentiment of builders is being affected by increased mortgage rates, worsening labor shortages, and rising material costs.
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released today indicates that builder confidence in the market for newly constructed single-family homes decreased by three points to 32 in September.
The primary reason for the decline in buyer traffic throughout the nation is the increase in mortgage rates.
Additionally, builders are confronted with persistent labor shortages, increasing gas and diesel prices, and increased material costs.
Builders in certain markets have reported that the presence of more stringent immigration enforcement policies is deterring legal workers from reporting to job sites.
The HMI indicates that builder confidence is at its lowest point since September 2025, as a result of the persistent persistence of elevated land, labor, and construction costs, as well as restrictive lending conditions.
It is important to note that 42% of builders rated the current availability of lots as poor, while 38% rated it as fair.
In September, 38% of builders reduced their prices, which represents an increase from 35% in August, according to the most recent HMI survey.
For the sixth month in a row, the average price reduction was maintained at 6%.
In September, 66% of builders reported using sales incentives, a rise from 63% in August and the highest share since 67% in December.
The NAHB/Wells Fargo HMI, which is based on a monthly survey that NAHB has been conducting for over 40 years, assesses builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair,” or “poor.” The survey also requests that builders evaluate the traffic of potential buyers as “high to very high,” “average,” or “low to very low.” The scores for each component are subsequently utilized to generate a seasonally adjusted index.
A value greater than 50 indicates that a greater number of builders perceive the conditions as favorable than unfavorable.
In September, the index that measures current sales conditions decreased by four points to 35, the index that gages future sales expectations decreased by six points to 37, and the index that charts prospective buyer traffic remained at 23.
The Midwest experienced a one-point decrease to 44, the Northeast experienced a five-point decline to 39, the South experienced a one-point decline to 31, and the West experienced a one-point increase to 28 when examining the three-month moving averages for regional HMI scores.
The HMI tables are available at nahb.org/hmi.
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