High mortgage rates and elevated building costs are dampening builder expectations. Confidence in the new-home market remained low in September, with the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) falling three points to 32.

How do builders feel about the current market?

According to the HMI, builder confidence reached its lowest level since September 2025.The index measuring current sales conditions in September fell four points to 35, and the index that measures future sales expectations dropped six points to 37. Only the index for prospective buyer traffic held steady at 23.

Land costs and availability are especially a challenge, with only 38% of builders rating lot availability as “fair,” while 42% said lot availability is “poor.”

Builders continue to cut costs

In order to make sales, builders are continuing to cut costs, with tje latest HMI survey showing 38% of builders cutting prices in September, compared with 35% in August. The average price cut remained at 6% for the sixth consecutive month.

Additionally, 66% of builders say they're using sales incentives in September, up from 63% in August and the highest share since the 67% recorded in December.