U.S. home builder confidence extends rebound in February, NAHB says

Applied Energetics

15/02/2023 15:00

By Dan Burns
       Feb 15 (Reuters) - Confidence among U.S. single-family
homebuilders improved for a second straight month in February -
and by much more than economists had anticipated - in a fresh
signal the housing market was turning a corner after last year's
huge slump.
    The National Association of Home Builders on Wednesday said
its NAHB/Wells Fargo Housing Market index rose seven points to
42 this month, notching the largest monthly gain in nearly a
decade outside of the rebound from the spring 2020 COVID-19
lockdowns.
    The reading - the highest since September - was also higher
than all 33 projections in a Reuters survey of economists, which
had a median estimate of 37. A reading below 50 indicates that
more builders view conditions as poor rather than good.
    The improvement this month builds on January's reading,
which had snapped a record-long string of 12 consecutive monthly
declines in construction firms' sentiment that had coincided
with the biggest annual drop in sales of new homes in 2022 since
2008, a plunge of more than 26%. 
    Total home sales - including the far-larger market for
existing homes - tumbled 33% last year as aggressive interest
rate increases by the Federal Reserve aimed at containing high
inflation drove up mortgage costs and stymied housing demand.
The Fed is likely to deliver at least two more rate increases in
coming months but appears to be closing in on the end-point for
the current rate-hike cycle.
    "(T)he two monthly gains for the HMI at the start of 2023
match the cautious optimism noted by the large number of
builders at the recent International Builders’ Show in Las
Vegas, who reported a better start to the year than expected
last fall," NAHB Chairman Alicia Huey, a builder from
Birmingham, Alabama, said in a statement.
    Moreover, it appears that the peak in mortgage rates has
passed, said NAHB Chief Economist Robert Dietz. Interest rates
on the most-popular U.S. home loan - the 30-year fixed-rate
mortgage - topped out above 7% in October but have receded
since, with the latest in a Mortgage Bankers Association weekly
survey seen at 6.39%.
    "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," Dietz said.
    NAHB said all four regions saw improved sentiment and the
index tracking expectations for future sales rose for a third
month. Its gauge of buyer traffic also ticked higher.
 (Reporting by Dan Burns; Editing by Andrea Ricci)
 ((daniel.burns@thomsonreuters.com))