US homebuilders' confidence fell to a seven-month low in April as the Iran war pushed up mortgage rates and materials costs at the start of the spring selling season.

An index of market conditions from the National Association of Home Builders and Wells Fargo declined four points to 34, according to data out Wednesday. A value below 50 means more builders see conditions as poor than good. Measures of current and future sales both deteriorated.

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The war in the Middle East is adding to a slew of challenges already facing the construction industry in recent years, including elevated mortgage rates, labor constraints and higher prices for materials. Those developments come as the housing sector enters the busiest season of the year for sales.

"With oil prices higher in the US, 62% of builders reported suppliers have increased building material costs due to higher fuel prices, including gas and diesel," Robert Dietz, chief economist at the NAHB, said in a statement. "With near-term economic risks elevated, 70% of builders reported challenges pricing homes given uncertainty about material costs."

Builder sentiment fell across the country. In the Midwest, it dropped to the lowest level in more than a year.

Mortgage rates have risen on expectations that the war will force policymakers to keep interest rates elevated for longer. Many builders have been relying on incentives in an effort to lure buyers, but the report indicated some are starting to pull back amid rising costs. 

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About 60% of builders said they used sales incentives, down slightly from March. The average price reduction also edged lower. 

The group's index of sales expectations in the next six months declined seven points to 42, the lowest level since June. The gauge of present sales and an index of prospective buyer traffic also decreased.

Separate data out this week showed sales of previously owned US homes fell last month to the lowest level in almost a year, while a government report due later this month will offer insights into new construction. 

Inventory levels remain constrained in much of the country, and new construction could help keep a lid on home prices. With affordability taking a central role ahead of November's midterm elections, President Donald Trump has proposed a series of initiatives to lower housing costs, including a ban on institutional investors purchasing single-family homes.