Home builder sentiment sank to new depths in October as elevated borrowing costs continue to undermine homebuying affordability.

The seasonally adjusted Housing Market Index (HMI), jointly published Monday by the National Association of Home Builders (NAHB) and Wells Fargo, slumped three points from September’s mark to a 14-year low of 29.

All three component indexes declined in October, with the index gauging traffic of prospective buyers plummeting five points to 18. That is its lowest reading since April 2012, excluding the immediate onset of the COVID-19 pandemic in the spring of 2020.

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“Housing remains squeezed by supply-side constraints and significant affordability challenges,” said NAHB Chief Economist Robert Dietz in an analysis published to the trade group’s website.

Six-months sales expectations fell five points to 32, while builders’ reported confidence in current sales conditions declined two points to 33, the HMI showed. Measured on a scale of 0 to 100, the index divides majority positive and negative market sentiment at 50. It has not crossed into positive territory since April 2024.

The chilling effect of higher mortgage rates on new-home purchase demand simultaneously prompted a large uptick in price reductions on new construction last month, the October builder survey indicated.

Approximately 43% of builders said they cut prices last month — the highest share in the past six years — compared to the 38% of builders who said they did so in September and 35% in August. Nearly two-thirds of respondents reported using sales incentives in October, matching September levels that had been the highest of 2026 so far.

“Demand persists, but higher mortgage rates, elevated construction costs and weaker consumer confidence are keeping more buyers on the sidelines,” added Dietz.

Meanwhile, home builders continue to contend with a range of other margin pressures that have forced the pace of single-family construction to contract for a second straight year.

High energy costs, Trump administration tariffs and trade disruptions, and construction labor shortages fueled by aggressive immigration enforcement and competition from data center projects have raised costs for builders to varying degrees across the U.S.

Rising interest rates across the economy have broadly raised builders’ financing costs, while expectations for mortgage rates above 7% through the end of next year prompted Dietz to forecast that single-family construction activity could decline again in 2027.