(Bloomberg) — US homebuilder sentiment increased in February by more than forecast, indicating an easing of mortgage rates over the past several months is helping support the housing market after a year-long rout.
(Bloomberg) — US homebuilder sentiment increased in February by more than forecast, indicating an easing of mortgage rates over the past several months is helping support the housing market after a year-long rout.
The National Association of Home Builders/Wells Fargo gauge rose 7 points, the biggest advance since mid-2020, to 42 this month, figures showed Wednesday. The median estimate in a Bloomberg survey of economists called for a reading of 37.
The increase in sentiment to a five-month high was fueled by more optimism about sales, the outlook and a pickup in prospective-buyer traffic. Despite a tough 2022 for real estate, consecutive monthly gains in confidence suggests cautious optimism about demand during the critical spring selling season.
“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,” Robert Dietz, NAHB chief economist, said in a statement.
“While we expect ongoing volatility for mortgage rates and housing costs, the building market should be able to achieve stability in the coming months, followed by a rebound back to trend home construction levels later in 2023 and the beginning of 2024,” he said.
Separate data Wednesday showed borrowing costs rebounded sharply last week, causing a pullback in applications for home loans and suggesting any rebound in housing demand will be bumpy. The Mortgage Bankers Association said the contract rate on a 30-year fixed mortgage jumped 21 basis points, the most in four months, to 6.39%. Home-purchase applications slid 5.5%.
The NAHB report showed sales expectations for the next six months jumped 11 points to 48, the highest since July. The group’s measure of current sales rose to a five-month high, while an index of prospective-buyer traffic was the strongest since September.
Builder sentiment rose in all four US regions.
–With assistance from Jordan Yadoo.
(Adds latest mortgage rates, applications data)
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