Builder confidence is falling, and the housing market is beginning to reflect it. Builder confidence fell six points in August, followed by another five-point drop in September, according to the National Association of Homebuilders (NAHB).

“High mortgage rates are clearly taking a toll on builder confidence and consumer demand, as a growing number of buyers are electing to defer a home purchase until long-term rates move lower,” said NAHB Chief Economist Robert Dietz. 

Mortgage rates were above 7% last month, which means that buyers have had to cut home prices to entice buyers. Almost 32% of builders reported cutting their rates in September, compared to 25% in August. This is the highest percentage reported so far this year.

To further incite potential homebuyers, 59% of builders have provided other sales incentives of all kinds. Even so, many people are choosing to keep their old homes in hopes that the mortgage rates will drop.

The NAHB Housing Market Index surveys builders on a variety of factors such as sales expectations and prospective buyer traffic. The sales conditions and expectations indices both dropped six points this past month, and the gauge measuring traffic of prospective buyers fell five points.