Over the last month, my butterfly bush has gotten sparse. Some of the leaves are dropping but most a turning yellow and look unhealthy. I tried watering more but am now wondering if I'm over watering

Can you upload a picture?

Really doubt you could over water...
Far more likely is root knot nematodes.

Where nematodes plague the gardener, these shrubs are going to be short lived.

Suggest trying vitex... much nicer, drought tolerant... and similar appeal.

Mine is in a container but has been struggling in this manner as well. I am suspicious of the cause being this extreme heat. You are south of me so perhaps hotter?

Could you tell us a bit about that location? How old is your shrub? I wonder if there are nearby trees that didn't shade that spot originally but now block too much light, or whose roots are competing with the buddleia roots and robbing it of water and nutrients. It has been mighty hot and underwatering is a strong possibility, especially if you just planted it this spring. If you only just recently increased the water, you won't be seeing a huge improvement immediately — yellow leaves won't turn green and new ones won't appear right away. Also, I see a lawn—have you used any herbicides product this year?Knowing more will help with further advice.

All good advise and things to consider.
A good deadheading would also spur new healthy growth.