Home builder sentiment fell for a seventh straight month in September as tougher mortgage requirements hindered sales from bloated inventories, the National Association of Home Builders said on Tuesday.

The NAHB/Wells Fargo Housing Market index declined 2 points to 20, matching the record low of January 1991 when the economy was slipping into recession, the NAHB said in a statement.

Economists polled by Reuters had forecast the index would fall to 20. Readings below 50 mean more builders view market conditions as poor than favorable.

A 2-year slump in U.S. housing has created excess inventories of unsold new homes, forcing builders to cut prices and offer incentives to boost sales. Sales have been curbed further since July as skittish investors cut back sharply on mortgage-related investments that finance most home loans.

"Certainly problems across the mortgage finance arena are taking their toll on buyer demand, which is weighing heavily on builder confidence measures," NAHB Chief Economist David Seiders said in the statement.

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