A house is built in a housing development on June 21, 2023 in Lemont, Illinois.
Scott Olson | fake images
Homebuilder confidence improved in January, jumping 7 points to 44 in the National Association of Home Builders' monthly index. Anything below 50 is still considered negative, but the index is up 10 points in the last two months.
Sentiment is now at the highest level since September.
The increase coincides with a big drop in mortgage interest rates from around 8% in mid-October to the 6% range in December. Builders clearly point out this, and the effect on affordability, to boost confidence.
“Lower interest rates improved housing affordability conditions last month, bringing some buyers back into the market after being sidelined in the fall by higher borrowing costs,” said Alicia Huey, NAHB president and builder. and custom home developer from Birmingham, Alabama. “Single-family housing starts are expected to grow in 2024, adding much-needed inventory to the market. However, builders will face increasing challenges with the cost and availability of building materials, as well as lot supply.”
Of the three components of the index, current sales conditions increased 7 points to 48, sales expectations in the next six months increased 12 points to 57 and buyer traffic increased 5 points to 29.
Regionally, on a three-month moving average, builder confidence increased the most in the Northeast, the only area now in positive territory at 55. Confidence remained stable in the Midwest and increased slightly in the South and the West.
