Rising consumer confidence has also helped sentiment rise
US home builders are feeling more confident in the market for newly-built single-family homes.
The National Association of Home Builders / Wells Fargo Housing Market Index for February gained 4 points to a reading of 62 as market conditions improved.
The index was unveiled Tuesday at the annual International Builders’ Show in Las Vegas.
“Ongoing reduction in mortgage rates in recent weeks coupled with continued strength in the job market are helping to fuel builder sentiment,” said NAHB Chairman Randy Noel. “In the aftermath of the fall slowdown, many builders are reporting positive expectations for the spring selling season.”
All components of the index gained for the second consecutive month. The measure of current sales conditions rose 3 points to 67, expectations for the next six months increased 5 points to 68, and the metric charting buyer traffic moved up 4 points to 48.
Affordability challenges remain
“Builder confidence levels moved up in tandem with growing consumer confidence and falling interest rates,” said NAHB Chief Economist Robert Dietz. “The five-point jump on the six-month sales expectation for the HMI is due to mortgage interest rates dropping from about 5% in November to 4.4% this week.”
But Dietz added that affordability remains a critical issue.
“Rising costs stemming from excessive regulations, a dearth of buildable lots, a persistent labor shortage and tariffs on lumber and other key building materials continue to make it increasingly difficult to produce housing at affordable price points,” he said.
