Homebuilder confidence rises to highest level since July

Despite high interest rates, homebuilder sentiment is positive for the first time since July 2023, according to the National Association of Home Builders/Wells Fargo Housing Market Index, which rose three points to 51 in March. This marks that fourth month in a row that the index increased.

Any reading over 50 is an indication that more builders see the market conditions as good than poor. It reflects the number of buyers consider new builds because of the limited supply of existing housing, as well as expectations that the Federal Reserve will begin to cut interest rates later this year.

“With the Federal Reserve expected to announce future rate cuts in the second half of 2024, lower financing costs will draw many prospective buyers into the market,” said NAHB chief economist Robert Dietz. “However, as home building activity picks up, builders will likely grapple with rising material prices, particularly for lumber.”