Aligning with recent data on faltering consumer sentiment and frustrations over elevated inflation, homebuilder sentiment fell in the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) report on Sept. 16.
“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 said in a statement. “Notably, 42% of builders rated current lot availability as poor and 38% as fair.”
The HMI index tracks overall builder attitudes toward housing market conditions on a scale ranging from zero to 100. In the latest report, builder confidence fell by three points between August and September, bringing the index to 32. The NAHB notes that any reading higher than 50 indicates that the majority of builders feel confident about the current and near-term outlook for housing.
The index for current sales conditions—or present sales of new single-family homes—fell by four points month-over-month to 35. Sales expectations for the next six months also fell on a monthly basis, dropping by six points down to 37.
NAHB Chairman Bill Owens attributed weakening builder confidence to high costs and labor issues.
“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,” he said in a statement.
Global tensions have placed continuous pressure on the economy, as the latest Consumer Price Index (CPI) was mainly influenced by a sharp increase in the price of gasoline and energy.
The latest jobs report from the Bureau of Labor Statistics did highlight a slight boost in August, but Realtor.com® Senior Economist Jake Krimmel did note that he “wouldn’t expect it to move housing demand much on its own.”
The prospective buyer traffic index remains steady yet low at 23, with Owens pointing to rising mortgage rates—which reached 6.76% in the latest Freddie Mac survey—as the cause.
For September, 38% of builders have cut prices, which is up from August’s share of 35%. More builders are also utilizing sales incentives, reaching 66% for the month and up from 63% in August. The report notes that the amount of builders using sales incentives is nearing December’s high of 67%.
Looking at the three-month moving averages for regional HMI scores, all but one of the regions saw slight increases. The Midwest fell by one point down to 44, the Northeast fell five points to 39 and the South fell by one point to 31. The West gained one point between August and September, but still has the lowest index of the four at 28.
