Homebuilder Confidence Falls to 12-Month Low
The NAHB index dropped to 32 in September as mortgage rates climbed to 6.97% and material costs rose.
US homebuilder confidence fell to 32 in September. This is the lowest level since September 2025. The index dropped three points from the previous month. The reading missed market expectations of 34.
Mortgage rates and material costs drove the decline. The average 30-year fixed rate hit 6.97%. This is the highest level since May 2025. Buyer traffic has weakened across the country.
Rising Rates Squeeze Demand
The Mortgage Bankers Association reported falling applications. The 30-year rate jumped from 6.85% to 6.97%. This increase reflects tighter lending conditions. Affordability remains a primary barrier for buyers.
Gasoline prices also added to cost pressures. The average price reached $4.37 per gallon. This is up from $4.07 a month earlier. Higher fuel costs affect logistics and construction expenses.
Builders Cite Cost Headwinds
NAHB Chairman Bill Owens cited rising material costs. Labor shortages persist in the sector. Gas and diesel prices have increased. These factors reduce profit margins for developers.
Lot availability remains tight. 42% of builders rated current lot availability as poor. Only 38% viewed it as fair. High land costs contribute to overall price increases.
Sales Incentives Rise
Current sales conditions dropped to 35. Future sales expectations fell to 37. 38% of builders reduced prices this month. This is up from 35% in August.
Sales incentives increased to 66% of builders. This is up from 63% last month. Truist Securities expects more companies to offer discounts. Weak demand continues to pressure the sector. Source: GN auto markets/housing: mortgage rates.
