Builder sentiment slipped in September as higher mortgage rates, labor shortages and rising material costs continue to pressure the housing market, according to the National Association of Home Builders (NAHB). The NAHB/Wells Fargo Housing Market Index (HMI) dropped three points to 32, marking the lowest level since September 2025.
“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 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, noted that tight lending conditions and raised land, labor and construction costs are suppressing builder confidence. The HMI’s current sales conditions index fell four points to 35, while the six-month sales expectations index dropped six points to 37. Prospective buyer traffic remained unchanged at 23.
Rising material costs and limited lot availability are compounding challenges. Dietz reported that 42% of builders rated current lot availability as poor and 38% as fair. Price cuts have become more common, with 38% of builders reducing prices in September, up from 35% in August. The average price cut held steady at 6% for the sixth month in a row.
Builders are increasingly relying on sales incentives to attract buyers. In September, 66% of builders offered such incentives, up from 63% in August and marked the highest share since December’s 67%. The HMI reflects ongoing weakness in demand and affordability constraints.
Regional data showed mixed results. The Midwest HMI slipped one point to 44, the Northeast dropped five points to 39, and the South fell one point to 31. The West edged up one point to 28. NAHB has tracked builder sentiment for over 40 years, measuring perceptions of sales conditions and traffic through a three-tier rating system.
A reading above 50 indicates more builders view conditions as good than poor, but the current index remains well below that threshold. The combination of higher borrowing costs, supply constraints and labor market pressures continues to dampen new home construction activity.
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