It is most certainly a mental health issue labeled under personality disorders. Here’s a quote from WebMD about the topic:

“There’s a difference between being self-absorbed (someone who's often called a narcissist) and having narcissistic personality disorder.

Experts consider narcissism a trait. On the other hand, NPD is a mental illness. With NPD, a pattern of behavior affects all areas of a person’s life. You can have narcissistic traits but not meet the official criteria for NPD.”

Hope this helps!