Higher mortgage rates, worsening labor shortages and rising material costs are weighing on builder sentiment. Builder confidence in the market for newly built single-family homes fell three points to 32 in September, according to the NAHB/Wells Fargo Housing Market Index (HMI). Buyer traffic has weakened across much of the country, largely because of rising mortgage rates. 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. The HMI shows builder confidence at its lowest level since September 2025, as tight lending conditions and elevated land, labor and construction costs persist. Notably, 42% of builders rated current lot availability as poor and 38% as fair.