“Buyer traffic is weak in many markets as more consumers remain on the sidelines due to high mortgage rates and home prices that are putting a new home purchase out of financial reach for many households,” said NAHB Chairman Jerry Konter, a homebuilder and developer from Savannah, Georgia.

Nearly a quarter of homebuilders also reported lowering home prices, up from 19% in August, Konter added.

Of the index’s three components, current sales conditions dropped 3 points to 54, sales expectations in the next six months fell 1 point to 46 and buyer traffic declined 1 point to 31.

Builders continue to report elevated construction costs, in addition to higher interest rates weighing on their market. Higher costs for land, labor and materials have made it harder for builders to lower prices, but they are now being forced to.

“In this soft market, more than half of the builders in our survey reported using incentives to bolster sales, including mortgage rate buydowns, free amenities and price reductions,” said Robert Dietz, chief economist at the NAHB.

On a three-month moving average, sentiment in the Northeast fell 5 points to 51 and also dropped 5 points to 44 in the Midwest. In the South, it slipped 7 points to 56, and in the West, where home prices are highest, sentiment declined 10 points to 41.