Key facts
- Homebuilder sentiment in the U.S. fell to a 12-month low in September.
- The NAHB/Wells Fargo Housing Market index dropped three points to 32.
- The 30-year fixed mortgage rate averaged 6.76% last week, the highest in over a year.
- Builders reported higher material costs, rising gas and diesel prices, and persistent labor shortages.
- 38% of builders reported cutting prices in September, up from 35% in August.
U.S. homebuilder sentiment declined to a one-year low in September, with the NAHB/Wells Fargo Housing Market index falling three points to 32, the lowest since September 2025. This drop was attributed to rising mortgage rates dampening demand, persistent labor shortages, and increased material costs due to tariffs.
The average 30-year fixed mortgage rate reached 6.76% last week, its highest level in over a year, according to Freddie Mac. This, combined with elevated home prices, is causing potential buyers to hesitate. The 10-year U.S. Treasury yield also hit a multi-year high of 5.041% on Tuesday, fueled by expectations of Federal Reserve rate hikes to combat inflation.
Builders are facing challenges including higher material costs, rising fuel prices, and ongoing labor shortages. Some builders also noted that increased immigration enforcement is discouraging legal workers. Consequently, the share of builders reporting price cuts rose to 38% in September from 35% in August, with the average reduction remaining at 6% for the sixth consecutive month. Sales incentives also increased to 66% from 63%. The survey's measures for current sales conditions and future sales saw significant drops, while prospective buyer traffic remained unchanged.