by Report comes out just as Fed raises interest rates for the 1st time since 2023
WASHINGTON — Builder confidence in the market for new single-family homes fell three points this month, declining to its lowest level in a year amid higher interest rates, higher materials costs and labor shortages.
The National Association of Home Builders/Wells Fargo Housing Market Index reported Wednesday that builder confidence fell by three points to 32.
The report is based on a monthly survey that NAHB has been conducting for more than 40 years. The NAHB noted that any figure above 50 indicates that more builders view conditions as good versus poor.
The decline in confidence occurs just as the Fed raised interest rates on Wednesday and as more builders are cutting prices to help boost sales. Thirty-eight percent reported they did so this month, up from 35% in August with the average price reduction remaining at 6% for the sixth consecutive month. The survey also noted that 66% of builders used sales incentives in September, up from 63% in August and the highest level since 67% in December, one of the more challenging months to sell new homes.
The sale of new and existing homes is directly tied to furniture sales as most people buy new furniture to complement the floor plan of their new residence. For some, this could mean adding a motion sectional for a larger living room, a bedroom suite for an extra bedroom, or a gathering-height dining set to entertain guests in that new sunroom they didn’t have in their previous home.
The figures follow a slow mid-summer period for new home sales in general. For example, as we previously reported, new home sales in July totaled 607,000, 6.3% below 648,000 in July 2025 and 10.5% below 678,000 in June 2026.
Data for the month of June showed that home sales were slightly better, totaling 678,000 in June, 2% above 665,000 in June 2025 in June 2026 and 7.6% above 630,000 in May.
“Buyer traffic has weakened across much of the country, largely because of rising mortgage rates,” said NAHB Chairman Bill Owens, a Worthington, Ohio-based homebuilder and remodeler. “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.”
Officials also noted that lot availability was another area of concern and one that potentially raises building costs.
“The HMI shows builder confidence at its lowest level since September 2025, as tight lending conditions and elevated land, labor and construction costs persist,” said NAHB Chief Economist Robert Dietz. “Notably, 42% of builders rated current lot availability as poor and 38% as fair.”
Other highlights of the report are as follows:
+ The index measuring current sales conditions in September fell four points to 35.
+ The index gauging future sales expectations dropped six points to 37.
+ And the index charting prospective buyer traffic was level at 23.
By region, the activity was as follows based on three-month moving averages:
+ The Northeast fell five points to 39.
+ The Midwest fell one point to 44.
+ The South fell one point to 31.
+ And the West rose one point to 28.
