Lower lumber costs and strong demand for housing helped raise builder confidence one point in September after a three-month decline, the National Association of Home Builders reported, citing the latest NAHB/Wells Fargo Housing Market Index.

September’s reading of 76 was up one point from August, despite lingering challenges with labor and the building-material supply chain, the NAHB said in a press release.

“The single-family building market has moved off the unsustainably hot pace of construction of last fall and has reached a still hot but more stable level of activity, as reflected in the September HMI,” NAHB chief economist Robert Dietz said in the release. “While building material challenges persist, the rate of cost growth has eased for some products, but the job openings rate in construction is trending higher.”

The index’s measure of current sales conditions rose one point to 82, while the six-month sales-expectations measurement was flat at 81. The buyer-traffic component rose two points to 61.

Regionally, the three-month moving average of the index slid two points in the South to 80, while the West slid two points to 83, the Northeast dropped two points to 72, and the Midwest was flat at 68.

“Regionally, we continue to see growth in the South and the West, particularly the Mountain West,” Dietz said. “Exurban markets have expanded the most over the last year, although inner suburbs are now experiencing an acceleration, with townhouse construction having had the best quarter in 14 years this spring.”

The NAHB/Wells Fargo survey measures builder perceptions of current single-family home sales, as well as sales expectations for the next six months, as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” The results are then used to calculate a seasonally adjusted index in which any number over 50 indicates that more builders view conditions as good than poor.