With housing prices being driven up by dwindling supply, it might seem like the obvious result would be a spike in new home construction. However, homebuyers are being driven out of the market by the staggeringly high prices, and builders are worried they won't be able to sell new homes, despite the shortage of houses for sale.

According to a survey from the National Association of Home Builders (NAHB), confidence in the market for new single-family homes amongst builders is at its lowest point since June of 2020. NAHB Chairman Jerry Konter said that these polling results are "a clear sign of a slowing housing market in a high inflation, slow growth economic environment,"

The NAHB survey is conducted once per month and asks respondents to rate their outlook on the single-family housing market currently and for the upcoming six months, as well as their outlook on buyer traffic. In the recent survey, all three categories declined, with confidence in buyer traffic seeing the largest drop.

Currently, the housing market is short by at least 2 million units based on what's needed to keep up with demand, though some have placed that number at as high as 4 million.

Meanwhile, housing prices have risen by roughly 35% in the past two years, and mortgage rates have shot up from less than 3% to more than 6%. Millions of potential homebuyers have been driven out of the market thanks to the high prices.

With construction supply costs up nearly 20% year-over-year, builders don't want to risk spending the money to build a home that no one will buy. This lack of confidence could make the housing shortage even worse.

To address the supply issues, Konter is calling on the U.S. government to do more to support home builders. Specifically, Konter wants a ramp-up in federal lumber production and a ban on Russian lumber. He is also calling on the government to suspend sanctions on Canadian lumber.