Builders ride falling mortgage rates to an increase in builder sentiment

For the second consecutive month, homebuilders have become more optimistic. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) report rose seven points month-over-month to a reading of 44 in January.

The report attributes this sharp increase in builder confidence to mortgage rates remaining under 7% for the past month.

“Lower interest rates improved housing affordability conditions this past month, bringing some buyers back into the market after being sidelined in the fall by higher borrowing costs,” Alicia Huey, the chairman of the NAHB, said in a statement. “Single-family starts are expected to grow in 2024, adding much needed inventory to the market.”