US homebuilder sentiment unexpectedly rises to highest level since July

Builders' assurance successful nan U.S. lodging market made a astonishment leap into affirmative territory this month, jumping to nan highest level since July arsenic much location buyers gravitate toward caller building amid nan ongoing shortage of existing homes.

The National Association of Home Builders/Wells Fargo Housing Market Index, which measures nan beat of nan single-family lodging market, roseate 3 points to 51 successful March, marking its 4th consecutive monthly rise.

Homes nether building astatine nan Cold Spring Barbera Homes subdivision successful Loudonville, New York, connected Nov. 8, 2023.  ( Angus Mordant/Bloomberg via Getty Images / Getty Images)

Any reference beneath 50 is considered negative. This is nan first clip nan scale has climbed supra nan break-even constituent since July. Economists expected this month's reference to stay level astatine 48.

"Buyer request remains brisk and we expect much consumers to jump disconnected nan sidelines and into nan marketplace if owe rates proceed to autumn later this year," said NAHB Chairman Carl Harris, a civilization location builder from Wichita, Kansas. 

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"But moreover though location is beardown pent-up demand, builders proceed to look respective supply-side challenges, including a scarcity of buildable tons and skilled labor, and caller restrictive codes that proceed to summation nan costs of building homes," Harris added.

A persistent shortage of existing homes connected nan marketplace is driving much buyers toward caller construction. (Photographer: David Paul Morris/Bloomberg via Getty Images / Getty Images)

Sentiment among builders began steadily falling astatine nan extremity of past summertime aft owe rates changeable supra 7%, throttling request among would-be homebuyers. But borrowing costs person retreated successful caller months arsenic galore investors judge nan Federal Reserve is done pinch its fierce interest-rate hike run – and will soon pivot to cutting rates.

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Rates connected nan celebrated 30-year fixed owe are presently hovering astir 6.74%, according to Freddie Mac, down from a precocious of 7.79% astatine nan extremity of October but good supra nan pre-pandemic mean of 3.9%.

Workers framework a location nether building astatine nan Cold Spring Barbera Homes subdivision successful Loudonville, New York, connected Nov. 8, 2023.  (Angus Mordant/Bloomberg via Getty Images / Getty Images)

The caller diminution has prompted a burst of optimism among homebuilders that nan worst whitethorn beryllium over. However, nan housing market is facing caller headwinds heading into 2024, including higher prices and shortages of labour and lumber.

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"With nan Federal Reserve expected to denote early complaint cuts successful nan 2nd half of 2024, little financing costs will tie galore prospective buyers into nan market," said NAHB main economist Robert Dietz. "However, arsenic location building activity picks up, builders will apt grapple pinch rising worldly prices, peculiarly for lumber."

FOX Business' Megan Henney contributed to this report.