According to the National Association of Home Builders/Wells Fargo Housing Market Index, American homebuilders are more optimistic about the housing market, with the index rising by the largest monthly gain since June 2013. Homebuilder confidence in the market for newly built single-family homes rose seven points to 42 in February, the highest reading since September. The rise is believed to be driven in part by slightly lower mortgage rates, leading to an increase in buyer demand.
Builders report that affordability is improving as mortgage rates are falling back from their highs of last fall and settling in a narrow range, which is increasing demand. Rates have moved up slightly in the past two weeks to the mid-6% range, but the Federal Reserve’s ongoing monetary policy conditions indicate that the housing market has passed its peak mortgage rates for this cycle. Builders are optimistic that, even with ongoing volatility in mortgage rates and housing costs, the building market should achieve stability in the coming months, followed by a rebound back to trend home construction levels later in 2023 and the beginning of 2024.
American homebuilders are optimistic about the housing market, which could be good news for home buyers. The rise in confidence is believed to be driven in part by slightly lower mortgage rates, which is increasing demand