The numbers: The National Association of Home Builders’ (NAHB) monthly confidence fell 3 points to 46 in September, the trade group said on Monday.

Outside of the pandemic, the September reading of 46 is the lowest level since May 2014.

It’s the ninth month in a row that the index has fallen.

A year ago, the index stood at 76.

Key details: All three gauges that underpin the overall builder-confidence index fell.

  • The gauge that marks current sales conditions fell by 3 points. 
  • The component that measures traffic of prospective buyers fell by 1 point.
  • And the gauge that assesses sales expectations for the next six months fell by 1 point.
  • All four regions posted a drop in builder confidence.

Declines were led by the West, which saw a 10-point drop, followed by the South, with a 7 point drop. The Northeast and the Midwest saw a 5-point drop.

Big picture: New home builders are struggling with attracting buyers, due to high rates and home prices.

Mortgage rates have exceeded 6%, or in other words, doubled since last year, which has considerably cooled buyer demand. Home prices continue to be elevated.

The median sales price for a new home was $439,400 in July, according to the U.S. Census Bureau.

Sellers are trying to pull out all the stops to boost sales.

Nearly a quarter of builders are dropping prices to attract buyers, which is up from 19% the previous month, the NAHB said. 

Some are even offering free amenities and mortgage rate buydowns. 

What the NAHB said: “Builder sentiment has declined every month in 2022, and the housing recession shows no signs of abating,” NAHB Chief Economist Robert Dietz said.

The drop comes as builders deal with higher construction costs, and as mortgage rates rise to the highest level since 2008.

Dietz said that more than half of the buyers the NAHB surveyed used incentives to lure buyers.

What are they saying? Builder confidence continues to decline, and other data that will be released this week will all paint a picture of a struggling sector, one economist noted.

“It’s little surprise that the most interest sensitive segment of the economy is breaking hard, especially after prices ran wild the past two years, pushing affordability to the worst level in 33 years,” Sal Guatieri, senior economist at BMO Capital Markets, wrote in a note.

Market reaction: The yield on the 10-year Treasury note TMUBMUSD10Y, 3.472% rose above 3.48% on Monday morning on expectations of a hawkish Fed meeting this week. While the SPDR S&P Homebuilders ETF XHB, +1.59% traded slightly lower during the morning session, the big home builder stocks, from D.R. Horton Inc. DHI, +2.33% to Toll Brothers TOL, +2.63% to Lennar LEN, +2.82%, edged higher.