The U.S. housing market appears to be becoming increasingly favorable for homebuilders, the National Association of Home Builders (NAHB)/Wells Fargo housing market index released on Monday revealed.
Rising from 50 to 55 in June, this is the first time in 11 months that the index has pushed into positive territory. It is also the sixth consecutive month that homebuilder sentiment has increased.
“Builders are feeling cautiously optimistic about market conditions given low levels of existing home inventory and ongoing gradual improvements for supply chains,” NAHB Chairman Alicia Huey observed.
Also helping to fuel builder sentiment is the gradual return of buyers to the market. Buyers largely exited the market over the past year as the Federal Reserve’s interest rate hikes pushed mortgage rates upward. Now, it appears as if buyers are adjusting to mortgage rates that have stabilized in the 6% to 7% range, Toll Brothers Chairman and CEO Douglas C. Yearley.
While the 30-year fixed mortgage was 6.69% last week, many builders do have the ability to offer a lower rate through their financing arms, thereby proving attractive to price-conscious buyers.