The decline was largely due to a spike in lumber prices caused by tariffs that the U.S. has placed on Canadian lumber, the association said. Demand for homes remains strong.

"Builders are optimistic about housing market conditions as consumer demand continues to grow," said NAHB Chairman Randy Noel, a custom home builder from LaPlace, Louisiana. "However, builders are increasingly concerned that tariffs placed on Canadian lumber and other imported products are hurting housing affordability. Record-high lumber prices have added nearly $9,000 to the price of a new single-family home since January 2017."

NAHB Chief Economist Robert Dietz said international trade issues do impact members.

"Improved economic growth, continued job creation and solid housing demand should spur additional single-family construction in the months ahead," Dietz said. "However, builders do need access to lumber and other construction materials at reasonable costs in order to provide homes at competitive price points, particularly for the entry-level market where inventory is most needed."