U.S. homebuilder sentiment weakened in September as higher mortgage rates, rising construction costs, labor shortages, and limited land availability continued to weigh on the new-home market.
The NAHB/Wells Fargo Housing Market Index (HMI) fell three points to 32, matching September 2025 as the lowest reading in more than three years. Current sales conditions declined to 35, while sales expectations fell to 37. Prospective buyer traffic remained unchanged at 23, reflecting continued pressure from elevated mortgage rates.
Builders also reported growing difficulty securing available lots. Forty-two percent rated current lot availability as poor, while another 38% described it as fair. Rising material and transportation costs, including higher gas and diesel prices, added to the challenges facing builders.
To support sales, builders increased the use of incentives in September. The share reporting price cuts rose to 38% from 35% in August, with the average reduction holding at 6%. Sales incentives also increased, with 66% of builders reporting their use—the highest level since December.
Regional sentiment was mixed. The Northeast recorded the largest monthly decline, falling five points to 39, while the Midwest and South each declined one point. The West was the only region to post an increase, rising one point to 28.
For the broader housing industry, weaker builder confidence and tighter development conditions could have implications for single-family rentals (SFR), build-to-rent (BTR), and multifamily development, particularly as developers and investors assess construction costs, land availability, financing conditions, and future housing supply.
Source: Mortgage News Daily
