WASHINGTON, March 16 (Reuters) - U.S. homebuilder sentiment edged up in March, but worries about higher construction costs and shortages of labor lingered, a survey showed on Monday.

The National Association of Home Builders/Wells Fargo Housing Market index increased one point to 38 this month, remaining below the 50 break-even point for 23 straight months.

Economists polled by Reuters had forecast the index unchanged at 37. The slight improvement in sentiment likely reflected lower mortgage rates at the start of the year after President Donald Trump ordered government-backed mortgage firms Fannie Mae and Freddie Mac to expand purchases of mortgage-backed securities. 

But mortgage rates have reversed course, rising in recent weeks as the U.S.-Israeli war with Iran raised oil prices and stoked inflation fears, driving up U.S. Treasury yields. Mortgage rates track the benchmark 10-year U.S. Treasury yield.

"Many buyers remain on the fence waiting for lower interest rates and due to economic uncertainty," said NAHB Chairman Bill Owens. "Builders are facing elevated land, labor and construction costs and nearly two-thirds continue to offer sales incentives in a bid to firm up the market."

Trump's sweeping tariffs, which he pursued under a law meant for use in national emergencies, have raised prices for building materials and appliances, while his immigration crackdown, including raids at construction sites, has undercut labor supply. Though the U.S. Supreme Court struck down the tariffs, Trump responded to the ruling by imposing a 10% global tariff, which he said would rise to 15%.

The Trump administration last week launched two trade investigations into excess industrial capacity in 16 major trade ​partners and into forced labor as it seeks to rebuild tariff pressure on trade partners.

The share of builders reporting cutting prices ticked up to 37% from 36% in February. The average price reduction was unchanged at 6%. The use of sales incentives dipped to 64% from 65% in February, still marking the 13th consecutive month this share has exceeded 60%. Builders are trying to reduce excess new housing inventory.

The survey's measure of current sales conditions nudged up to 42 from 41, while its gauge of future sales rose two points to 49. A measure of prospective buyer traffic increased three points to 25.

Trump last week signed an order to eliminate regulatory burdens associated with housing construction and another easing regulations related to mortgage costs and home loans. Housing affordability has become ⁠an increasingly potent political issue ahead of the November mid-term elections.

"Down-payment hurdles and uncertainty from the conflict with Iran and the price of oil will be headwinds going forward," said NAHB Chief Economist Robert Dietz. "The administration's executive orders issued last week to reduce regulatory burdens associated with home building are a positive step toward increasing attainable housing supply."