U.S. homebuilders are concerned that limited land and rising costs for building materials and labor will slow sales in the short term.
Still, their outlook for sales over the next six months climbed to the highest level in more than six years - suggesting the obstacles could be temporary.
The National Association of Home Builders/Wells Fargo builder sentiment index fell this month to 42 from 44 in March. It was the third decline since January. Measures of customer traffic and current sales conditions both declined from March's reading.
Readings below 50 suggest negative sentiment about the housing market. The last time the index was at 50 or higher was in April 2006.
The recent declines come after the index had been trending hiring since October 2011, when it was 17.