With increasing consumer confidence and rapidly falling interest rates reflected, the National Association of Home Builders released its Tuesday report detailing a substantial increase in US home builders ‘ optimism in February.
The report indicated that the NAHB / Wells Fargo Housing Market Index increased to 62 in February, after soaring to 58 in January.
Economists anticipated the index to inch up to 59. With the rise, the index proceeded to recuperate after reaching a lower level of 56 over three years in December.
NAHB Chairman Randy Noel said,
Ongoing reduction in mortgage rates in recent weeks coupled with continued strength in the job market are helping to fuel builder sentiment.
In the aftermath of the fall slowdown, many builders are reporting positive expectations for the spring selling season.”
The much larger than anticipated increase of the headline index mirrored ongoing gains in all the component indices. The element measuring expectations for the forthcoming six months increased to 68 in February from 63 in January, while metric graph buyer traffic rose to 48 from 44, and current sales measurement indicators rose to 67 from 64.
NAHB Chief Economist Robert Dietz said
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. However, 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.
Coming Tuesday, the Commerce Department is slated to release new building data in December, which has been delayed as a result of the government shutdown.
