A major housing indicator just flashed its most negative reading in 14 years

The mood among America’s homebuilders is grim.

Homebuilder sentiment fell three points to 29 in October, according to the National Association of Home Builders/Wells Fargo Housing Market Index.

October’s reading marks the lowest homebuilder sentiment the US has seen since June 2012, the NAHB said, when the housing market was still moving through the aftermath of the 2008 crisis.

It shows just how much builders have soured on the housing landscape amid rising costs and a record-breaking slowdown in home sales.

Here’s what explains the decline: “Housing remains squeezed by supply-side constraints and significant affordability challenges,” Robert Dietz, the chief economist at the NAHB, said in a statement.

The Housing Market Index remains well-below the midway threshold of 50, which suggests that homebuilding is solidly in contractional territory.

Most housing economists don’t expect the outlook for sales or affordability to improve meaningfully anytime soon.

That’s largely because rates are likely to stay higher-for-longer, which will continue to act as a barrier for prospective buyers.

Sara Godfrey, an economist at Oxford Economics, said the latest “depressed” homebuilder sentiment reading was consistent with the firm’s view that the housing market would remain stagnant all throughout next year.

Goldman Sachs also said it expects demand to remain “tepid,” adding that existing home sales were likely to fall over the next several months.

Oliver Allen, a senior US economist at Pantheon Macroeconomics, forecast a “meaningful slowdown” in new home sales, pointing to the impact of the recent surge in rates. “If anything—confidence is likely to fall much further over the next month or two, given the recent trends in rates,” he wrote in a client note on Monday.