Builder confidence rose for the second month in a row in February, hitting its highest level since September 2022, the National Association Home Builders reported, citing easing mortgage rates and an increasing belief that the single-family home market is turning a corner, despite continued high construction costs and supply-chain issues for building materials.
Specifically, the NAHB/Wells Fargo Housing Market Index (HMI) jumped seven points to 42.
“While the HMI remains below the breakeven level of 50, the increase from 31 to 42 from December to February is a positive sign for the market,” NAHB Chief Economist Robert Dietz said in a news release.
The HMI is made up of three components, all of which rose for the second month in a row. The component gauging current sales conditions rose six points to 46, the component charting sales expectations in the next six months increased 11 points to 48 and the gauge measuring traffic of prospective buyers increased six points to 29.
Regionally, the three-month moving average of the index rose in all geographic regions. It increased four points to 37 in the Northeast, one point to 33 in the Midwest, four points to 40 in the South and three points to 30 in the West.
“Even as the Federal Reserve continues to tighten monetary policy conditions, forecasts indicate that the housing market has passed peak mortgage rates for this cycle,” Dietz said. “And while we expect ongoing volatility for mortgage rates and housing costs, the building market should be able to achieve stability in the coming months.”