Builder confidence in the market for newly built single-family homes fell three points to 32 in September, as higher mortgage rates, rising construction costs and persistent labor shortages continued to weigh on the housing market, according to the latest NAHB/Wells Fargo Housing Market Index (HMI).
The index measuring current sales conditions dropped four points to 35, while expectations for sales over the next six months fell six points to 37. Prospective buyer traffic remained unchanged at 23.
Affordability pressures are prompting more builders to offer incentives. In September, 38% of builders reported cutting prices, up from 35% in August, with the average reduction holding at 6% for the sixth consecutive month. Meanwhile, 66% of builders used sales incentives, up from 63% in August and the highest share since December.
NAHB also cited elevated land, labor and material costs as ongoing challenges, with 42% of builders rating current lot availability as poor and another 38% as fair.
On a three-month moving average, builder sentiment declined in three of four regions. The Midwest fell one point to 44, the Northeast dropped five points to 39 and the South declined one point to 31. The West gained one point to 28.
HMI tables can be found at nahb.org/hmi. More information on housing statistics is also available at Housing Economics PLUS.
About NAHB: The National Association of Home Builders is a Washington-based trade association representing more than 140,000 members involved in home building, remodeling, multifamily construction, property management, subcontracting, design, housing finance, building product manufacturing and other aspects of residential and light commercial construction.
