Builder sentiment soured in March as the housing construction industry faced economic uncertainty, tariff threats and higher construction costs, according to a national market index created by the National Association of Home Builders (NAHB) and Wells Fargo.

The Housing Market Index (HMI) found that builder confidence in the market for newly built single-family homes fell to 39 in March, three points below the reading for February and the lowest level in seven months.

The survey also found that 29% of builders cut home prices in March, up from 26% in February. The average price reduction during the month was 5%, the same level as the previous month. The use of sales incentives was 59% in March, also unchanged from February.

Compiled from a monthly survey, the HMI gauges builder perceptions of the current market for single-family home sales and the expectations for sales during the next six months. Any number above 50 indicates that more builders view conditions as positive than negative.

The three-month moving average for the HMI found that builder sentiment in the Northeast fell three points but remained positive at 54. Not so in the Midwest, where sentiment also moved three points lower to 42.

Builder attitudes in the South dropped four points to match the Midwest negative level of 42. The lowest reading, however, was in the West, where builder sentiment fell two points to a disappointing 37.

“Construction firms are facing added cost pressures from tariffs,” said Robert Dietz, NAHB’s chief economist. “Data from the HMI March survey reveals that builders estimate a typical cost effect from recent tariff actions at $9,200 per home. Uncertainty on policy is also having a negative impact on home buyers and development decisions.”