Despite the recent spike in mortgage rates, home builders are growing more confident in the housing market.
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index rose 2 points from the previous month to 43 in October, marking the second straight month of increases. The October figure was higher than economists’ expectations of 42, according to Bloomberg data.
Still, readings below 50 indicate that more builders consider conditions to be worse than good.
“Although housing affordability remains low, builders are becoming more optimistic about market conditions in 2025,” Karl Harris, chairman of NAHB, a Wichita, Kan., custom home builder, said in a press release.
Mortgage rates have been rising recently, with the average rate on a 30-year fixed-rate loan last week at 6.32%, up from 6.12% the week before and the largest week-over-week increase since April, according to Freddie Mac. Mortgage rates, which tend to track U.S. Treasury yields, rose recently as strong job growth and sustained inflation led traders to temper expectations about how aggressively the Fed would cut rates. There is a trend.
The NAHB survey also found that more builders offered concessions in October. The survey found that 62% of builders used some type of sales incentive to close a deal, up from 61% in September. Meanwhile, 32% of builders lowered home prices in October to promote sales, just as they did last month. The average price reduction rate was 6%, up from 5% last month.
The index showing sales prospects for the next six months rose four points to 57. Traffic indicators for prospective buyers and the NAHB index, which measures current sales status, both increased by 2 points in October.
