Builder confidence in the market for newly built single-family homes fell three points to 32 in September, its weakest reading in a year, as higher mortgage rates thinned the flow of shoppers through model homes and builders leaned harder on price cuts and incentives to close the sales they could get.
The NAHB/Wells Fargo Housing Market Index was released Sept. 16 by the National Association of Home Builders. At 32, the index sits 18 points below the break-even line of 50, the level at which the share of builders rating sales conditions “good” matches the share calling them “poor.”
“Buyer traffic has weakened across much of the country, largely because of rising mortgage rates,” said NAHB Chairman Bill Owens, a home builder and remodeler 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.”
Expectations fell fastest
The steepest drop came in the component builders use to describe the next six months. The index tracking sales expectations fell six points to 37. The gauge of current sales conditions fell four points to 35. Buyer traffic, already the weakest of the three readings, held steady at 23.
That combination β a sharper fall in expectations than in present conditions β describes builders who are not primarily reacting to what happened in August but to what they think the fall selling season now looks like.
The discounting numbers support that reading. NAHB said 38% of builders cut prices in September, up from 35% in August. The average size of the cut held at 6% for a sixth consecutive month, suggesting builders are widening the number of homes they discount rather than deepening the discount on each one.
Sales incentives are doing more of the work. Two-thirds of builders β 66% β reported using them in September, up from 63% in August and the highest share since 67% in December.
Rates moved before the Fed did
The survey landed on the morning the Federal Reserve’s policy committee was scheduled to conclude a two-day meeting. The Federal Open Market Committee met Sept. 15-16, one of the four 2026 meetings accompanied by a Summary of Economic Projections, according to the Fed’s published calendar.
Long-term mortgage rates had already moved without waiting for that decision. The 30-year fixed-rate mortgage averaged 6.76% in Freddie Mac’s Primary Mortgage Market Survey as of Sept. 10, up from 6.71% a week earlier and from 6.35% a year before. The 15-year fixed averaged 6.09%. Mortgage rates track long-term Treasury yields far more closely than they track the Fed’s overnight policy rate, one reason, on our reading, that a builder’s traffic count can deteriorate weeks before any central bank announcement. RealtyWire covered the earlier stage of that climb when the 30-year contract rate reached 6.79% in early September.
Land, labor and materials
NAHB Chief Economist Robert Dietz pointed to supply-side costs that do not move with the rate cycle. “The HMI shows builder confidence at its lowest level since September 2025, as tight lending conditions and elevated land, labor and construction costs persist,” he said. “Notably, 42% of builders rated current lot availability as poor and 38% as fair.”
Taken together, that means 80% of builders describe the supply of finished lots as something less than good β a constraint that limits how quickly the industry could respond even if demand returned. Competition for developable land has intensified from outside the housing industry as well; homebuilders have said data center developers are outbidding them for sites.
Material costs remain the other pressure. NAHB research published in August found the median builder saw annual building material cost increases of 6.7%, with the smallest builders absorbing roughly five times the increase that the largest ones reported.
The regional picture
On the three-month moving averages NAHB uses to smooth regional readings, the Midwest slipped one point to 44 and remains the strongest region. The Northeast fell five points to 39, the largest regional decline. The South fell one point to 31. The West gained a point to 28 and is still the weakest region in the survey.
The HMI is drawn from a monthly survey NAHB has conducted for more than 40 years. Builders rate present sales of new single-family homes and expected sales over the next six months as “good,” “fair” or “poor,” and rate prospective buyer traffic as “high to very high,” “average” or “low to very low.” The component scores are seasonally adjusted into the headline index. Full tables are posted on NAHB’s Housing Market Index page.
For agents and brokers working new construction, the operative number in this release is arguably not 32 but 66. Builders willing to pay for rate buydowns, closing costs and upgrades on two-thirds of their transactions are effectively bidding for buyers that the resale market is not producing β and the September survey says that bidding got more aggressive, not less. More coverage of new construction and builder economics is collected on RealtyWire’s Housing Market page.
