By Amina Niasse
NEW YORK (Reuters) - U.S. homebuilder confidence rose in March to the highest level since July due to easing mortgage rates and an improved pricing environment amid a continued existing home inventory shortage, the National Association of Home Builders said on Monday.
The NAHB/Wells Fargo Housing Market Index of builder confidence rose to 51 this month from an unrevised 48 in February. A Reuters poll showed economists expected the outlook to remain unchanged at 48 in March.
"Buyer demand remains brisk and we expect more consumers to jump off the sidelines and into the marketplace if mortgage rates continue to fall later this year," NAHB Chairman Carl Harris said in a statement.
Traffic slowed during the second half of last year on the back of the Federal Reserve's interest rate hikes, which were launched in March of 2022 in an effort to curb rising inflation. The monetary policy tightening drove the average rate on the 30-year fixed-rate mortgage to two-decade highs near 8% in October.
With the U.S. central bank likely near the end of its rate hiking cycle, the 30-year fixed-rate mortgage averaged 6.74% for the week ended March 14, according to Freddie Mac. The drop has drawn buyers from the sidelines, raising the index of prospective buyers from a 13-month low of 21 in November to 34 in March – the highest since August 2023, according to the NAHB.
The easing of mortgage rates has also allowed builders to hold off on slashing home prices. As recently as December, more than a third of builders reported offering price concessions. In March, that was down to 24%, the lowest level since July 2023, the NAHB said.