The National Association of Homebuilders (NAHB) announced on Wednesday its housing market index (HMI) fell 3 points to 83 in January from 86 in December. This was the lowest reading since September.

Economists had forecast the HMI to stay at 86.

A reading over 50 indicates more builders view conditions as good than poor.

All three HMI components recorded declines this month. The indicator gauging current sales conditions fell 2 points to 92 in January, while the measure charting sales expectations also dropped 2 points to 83 and the component measuring traffic of prospective buyers declined 5 points to 68.

NAHB Chairman Chuck Fowke noted: “Despite robust housing demand and low mortgage rates, buyers are facing a dearth of new homes on the market, which is exacerbating affordability problems. Builders are grappling with supply-side constraints related to lumber and other material costs, a lack of affordable lots and labor shortages that delay delivery times and put upward pressure on home prices. They are also concerned about a changing regulatory environment.”

Meanwhile, NAHB Chief Economist Robert Dietz said: “While housing continues to help lead the economy forward, limited inventory is constraining more robust growth. A shortage of buildable lots is making it difficult to meet strong demand and rising material prices are far outpacing increases in home prices, which in turn is harming housing affordability.”