Home builders are growing more confident in the housing market, with hopes that lower mortgage rates will boost buyer demand.
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) rose 4 points in February to 48, marking the third straight month of gains and the highest level since August 2023. did. Economists surveyed by Bloomberg had expected the numbers to rise. 46's.
The continued enthusiasm reflects the strength of the new home market and expectations that mortgage rates will continue to fall, further spurring purchase intent.
Alicia Huey, president of NAHB, a custom home builder and developer in Birmingham, Ala., said in a press release that “even a small drop in interest rates generates a disproportionately positive response among prospective homebuyers, which increases the traffic is improving.”
“Mortgage rates remain too high for many prospective buyers, but if mortgage rates continue to fall this year, we expect pent-up demand to bring more buyers into the market.”
Mortgage rates have fallen from a peak of nearly 8% last year, and more builders are refraining from lowering home prices to boost sales. In February, 25% of builders reported reducing home prices, down from 31% in January 2023 and 36% in the last two months of 2023.
Meanwhile, the percentage of construction companies offering some type of incentive was 58% in February, down from 62% in January and the lowest level since August last year.
