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Builders are feeling less confident about the housing market as they navigate economic uncertainty, the threat of tariffs, and high housing costs.

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index fell to 39 in March, down 3 points from February and the lowest level in seven months. According to Bloomberg data, economists were expecting a reading of 42. A reading below 50 indicates more builders view conditions as poor rather than good.

“Builders continue to face elevated building material costs that are exacerbated by tariff issues, as well as other supply-side challenges that include labor and lot shortages,” NAHB Chairman Buddy Hughes, a homebuilder and developer from Lexington, N.C., said in a press release.

President Trump last week imposed a 25% tariff on all imported steel and aluminum products, without exemptions or exceptions, a move that could raise housing costs.

“Construction firms are facing added cost pressures from tariffs,” NAHB chief economist Robert Dietz said in the release.

Dietz noted “Data from the HMI March survey reveals that builders estimate a typical cost effect from recent tariff actions at $9,200 per home. Uncertainty on policy is also having a negative impact on home buyers and development decisions.”