The confidence of homebuilders has eroded to a maximum since 2014, as the housing market struggles to make up for it.

Bloomberg News / Landov

Numbers: The monthly index of confidence of the National Association of Home Builders dropped eight points to 60 in November.

What happened: The many headwinds in the industry have finally emerged in this report. The workforce is still expensive, it is still lacking, the wood is at the mercy of pricing policies, and now, mortgage rates are rising and customers are holding back.

NAHB, the Washington lobby of the construction sector, noted in a press release that reading 60 is still "positive", but that "customers are taking a break". The eight-point drop is just a reminder of the nine-point drop just after the 9/11 attacks and another case, a 10-point drop in early 2014. The overall result is the lowest since mid-2016. The November results missed Econoday's consensus on a flat reading.

In November, the current condition sub-gauge fell seven points to 67, the tracking of expected future conditions dropped 10 points to 65, and the gauge of buyer traffic fell by eight points to 45.

Any reading of more than 50 signals of improvement.

Read also: Housing starts decline slightly over another weak month for residential construction

Big picture: The measure of builder sentiment has long been viewed as an early reading of the pace of construction, an important economic indicator given the desperate need for an increased number of new homes.

But such a brutal fall may foreshadow something more sinister than a slower pace of construction. Home builders were one of the first groups to feel the top of the market cycle just before the Great Recession. In June 2005, the NAHB index reached 72, its highest cycle. He began to fall the next month and by mid-2006 he was in contraction territory.

True, the builders may not be the canaries of the coal mine, as they were ten years ago. And many economists have already called the top of the housing cycle. Nevertheless, such a sudden decline can only seem worrying.

What they say: On Monday, Moody's Investors Service lowered its outlook for the US building materials sector, saying "growth in private residential construction is slowing."

Market reaction: All the headwinds that builders boast may already be generated by the actions of large companies. D.R.Horton, Inc. Shares

DHI -0.58%

are down 32% since the beginning of the year, while KB Home

KBH, + 1.84%

stocks lost 41% in this time.

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