Confidence among U.S. homebuilders this month tumbled to the lowest level in a year, as mortgage rates near 7%, worker shortages and higher materials costs weaken hopes for the nation's stagnant housing market.
The Housing Market Index from the National Association of Home Builders and Wells Fargo fell 3 points to 32, the worst reading since September 2025 and matching the lowest since late 2022. It was also below the 34 median estimate in a Bloomberg survey of economists.
A reading below 50 indicates more builders see conditions as poor than good, and the index has stayed below that level for more than two years.
Along with weak buyer traffic, "builders also continue to face higher material costs, rising gas and diesel prices and persistent labor shortages," NAHB Chairman Bill Owens, an Ohio homebuilder, said in a statement. "In some markets, builders report that increased immigration enforcement is discouraging legal workers from reporting to job sites."
Among the index's components, a gauge of future sales expectations dropped to the lowest since early 2023, while an index of present sales also fell. A measure of prospective buyer traffic was unchanged at a low level.
The downbeat outlook reflects the challenges facing the country's homebuilders, with little sign of a catalyst to change things until would-be homebuyers see some relief from high borrowing costs. One of the lowest consumer sentiment readings on record is also pushing back chances of a turnaround.
Investors have been glum about the industry. An exchange-traded fund that holds builder and materials companies, the iShares US Home Construction ETF, is down about 20% over the year.
This month, builders kept up the pace of offering incentives to lure customers. The share that reported using them increased to 66% from 63% in August, according to the NAHB survey. Meantime, the share that reported cutting prices rose to 38% from 35% a month earlier.
Across the US, builder sentiment in the South, the nation's biggest homebuilding region, slipped to the lowest in a year. Sentiment also fell in the Midwest and Northeast, though it rose slightly in the West.
The federal government will provide a look at the US's new-home market on Thursday with the release of its new residential construction report for August, while the National Association of Realtors will release pending-home sales for August on the same day.
