WASHINGTON, Sept 16 (Reuters) - U.S. homebuilder sentiment dropped to a one-year low in September as rising mortgage rates dampen demand for housing, a survey showed on Wednesday.
The National Association of Home Builders/Wells Fargo Housing Market index fell three points to 32 this month, the lowest reading since September 2025, from 35 in August. The decline also reflected labor shortages amid an immigration crackdown as well as rising costs because of tariffs on imports.
Economists polled by Reuters
had forecast the index easing to 34. Sentiment is likely to remain subdued in the months ahead as mortgage rates have been rising in tandem with the 10-year U.S. Treasury yield.
The 30-year fixed mortgage rate averaged 6.76% last week, the highest level in more than a year, up from 6.71% in the prior week, data from mortgage finance firm Freddie Mac showed.
The 10-year government bond yield on Tuesday hit 5.041%, the highest since July 2007, driven in part by expectations that the Federal Reserve would on Wednesday start raising interest rates to quell inflation that is being driven by the U.S.-Israel war with Iran. Longer-dated yields have also risen amid concerns over the nation's ballooning debt.
"Buyer traffic has weakened across much of the country, largely because of rising mortgage rates," said NAHB chairman Bill Owens. "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 higher borrowing costs and still elevated home prices are driving potential homeowners to the sidelines. The National Association of Realtors reported last week that sales of previously owned homes dropped to a 14-month low in August.
There is also a glut of unsold new homes on the market, discouraging builders from breaking ground on new housing projects. The share of builders reporting cutting prices increased to 38% this month from 35% in August.
The average price reduction was unchanged at 6% for the sixth straight month. The use of sales incentives rose to 66% from 63% in August. The survey's measure of current sales conditions dropped four points to 35, while its gauge of future sales tumbled six points to 37. A measure of prospective buyer traffic was unchanged at 23.
(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama )
