Lower mortgage rates fueled an increase in homebuilder enthusiasm to start the new year.
Builders’ confidence rose 7 points to 44 in January, per the National Association of Home Builders/Wells Fargo Housing Market Index, marking a second consecutive monthly gain.
“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,” said NAHB chairman Alicia Huey, a custom home builder and developer from Birmingham, Ala., in a press release.
“Single-family starts are expected to grow in 2024, adding much needed inventory to the market. However, builders will face growing challenges with building material cost and availability, as well as lot supply.”
Builders’ sales expectations for the next six months jumped 12 points to 57. A number above 50 is considered good.
Builders still kept slashing home prices to drive up sales, with 31% reporting cutting them, down from 36% during the previous two months, the lowest rate since last August, per the NAHB report.
Over 60% of builders continue to roll out some type of sale incentive in January to entice more buyers back into the market.
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