"Significant segments of the homebuying population are priced out of the market," said Robert Dietz, NAHB's chief economist. "Policymakers must address supply issues to help builders produce more affordable housing."

As builders halt or slow new construction, it will weigh even further on the housing market. Housing inventory was already extremely tight, pushing home prices higher. Slowing the supply of new homes will make it even worse.

New homes that are on the market are selling swiftly in 2.4 months. The norm is around 3 to 4 months, said Lawrence Yun, chief economist at the National Association of Realtors.

"Homebuilders have been facing supply-chain disruptions and many homes started multiple months ago have yet to be completed," said Yun. "Homebuilders are waiting to see how these homes will sell before starting new construction.

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But overall affordability constraints may push more buyers into renting, he said.

"Housing supply challenges will continue in the coming months and into next year," said Yun.