U.S. home builder spirits brighten to kick off 2023, NAHB says

Applied Energetics

18/01/2023 15:00

By Dan Burns
       Jan 18 (Reuters) - Confidence among U.S. single-family
homebuilders improved for the first time in more than a year in
January, potentially signaling the housing slump may have
reached its low point even as construction firms' sentiment
remains decidedly bearish.
    The National Association of Home Builders on Wednesday said
its NAHB/Wells Fargo Housing Market index rose four points to 35
this month, matching the high end of estimates of 27 economists
in a Reuters poll and exceeding the median view of 31. A reading
above 50 indicates that more builders view conditions as good
rather than poor.
    January's uptick snapped a record-long string of 12
consecutive monthly declines that had dragged the index to the
lowest since June 2012, aside from the brief plunge in the
spring of 2020 at the onset of the coronavirus pandemic.
    “It appears the low point for builder sentiment in this
cycle was registered in December, even as many builders continue
to use a variety of incentives, including price reductions, to
bolster sales,” said NAHB Chairman Jerry Konter, a home builder
and developer from Savannah, Georgia. “The rise in builder
sentiment also means that cycle lows for permits and starts are
likely near, and a rebound for home building could be underway
later in 2023.”
    The housing market has seen the most pronounced effects so
far of the Federal Reserve's aggressive interest rate hikes
aimed at quashing inflation that continues to hold at
unacceptably high levels. Interest rates on the most popular
type of U.S. home loan topped 7% - the highest since 2001 - in
October, and sales of new and existing homes tumbled by more
than 35% from January through November. 
    Since March, the U.S. central bank has lifted its benchmark
policy rate from near zero to a range of 4.25%-4.50%. It
indicated at its meeting last month that rate hikes will
continue into this year until it is fully confident inflation is
declining from the four-decade highs touched in mid-2022 back
toward its targeted level of 2% at an annual rate.
    Mortgage rates have eased recently, though, as investors
betting the Fed is near the end of its rate hikes have driven
down yields on the Treasury securities that determine home
borrowing costs. Last week the contract rate on a 30-year
fixed-rate mortgage fell to the lowest since September and loan
application volumes increased, another potential indication of a
bottom for the housing slump.
    NAHB said all four regions saw improved sentiment and the
index tracking expectations for future sales rose for a second
month. Its gauge of buyer traffic also ticked higher.
 (Reporting by Dan Burns; Editing by Chizu Nomiyama)
 ((daniel.burns@thomsonreuters.com))