The confidence index fell for the third-straight month to 40 from a revised September reading of 44, the National Association of Homebuilders (NAHB)/ Wells Fargo report said. The figure is also below a Reuters poll showing economist expectations of an unchanged index of 44.

“Builders have reported lower levels of buyer traffic, as some buyers, particularly younger ones, are priced out of the market because of higher interest rates,” said NAHB Chairman Alicia Huey. “Higher rates are also increasing the cost and availability of builder development and construction loans, which harms supply and contributes to lower housing affordability.”

Builder sentiment began sliding in August, the same month where rates on home loans reached above 7%. Amid the Federal Reserve’s rate-hike campaign, mortgage rates have steadily risen since last year, now remaining at a two-decade high.

Demand for new homes was bolstered during the first half of 2023 as high rates discouraged homeowners from selling, limiting inventory and lifting the appeal of new construction. Buyer traffic peaked in July at 40, falling to 26 in October, the lowest since January.

Builders slashed prices again this month in an effort to increase affordability for buyers and boost sales, with 32% of builders cutting prices in October. Another index tracking present sales conditions fell 4 points to 46, with the six-month sales outlook falling to 44 from 49 the month prior.