Confidence among U.S. single-family homebuilders improved for a second straight month in February – and by much more than economists had anticipated – in a fresh signal the housing market was turning a corner after last year’s huge slump.
The reading – the highest since September – was also higher than all 33 projections in a Reuters survey of economists, which had a median estimate of 37. A reading below 50 indicates that more builders view conditions as poor rather than good. Total home sales – including the far-larger market for existing homes – tumbled 33 per cent last year as aggressive interest rate increases by the Federal Reserve aimed at containing high inflation drove up mortgage costs and stymied housing demand. The Fed is likely to deliver at least two more rate increases in coming months but appears to be closing in on the end-point for the current rate-hike cycle.
Moreover, it appears that the peak in mortgage rates has passed, said NAHB Chief Economist Robert Dietz. Interest rates on the most-popular U.S. home loan – the 30-year fixed-rate mortgage – topped out above 7 per cent in October but have receded since, with the latest in a Mortgage Bankers Association weekly survey seen at 6.39 per cent.
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