For the third month in a row, builder sentiment is up. The National Association of Home Builders' (NAHB)/Wells Fargo Housing Market Index (HMI) for February shows builder confidence in the market for newly built single-family homes climbed four points, reaching 48—the highest level since August last year, NAHB's Eye On Housing reports.
In fact, all three of the major HMI indexes posted gains in February: the index tracking current sales conditions rose four points to 52; the index measuring sales expectations during the next six months increased three points to 60; and the index gauging prospective-buyer traffic went up four points to 33.
With mortgage rates now below 7% since mid-December, more builders are cutting back on reducing home prices to boost sales. In February, 25% of builders reported cutting home prices, down from 31% in January and 36% in the last two months of 2023. However, the average price reduction in February held steady at 6% for the eighth straight month. Meanwhile, the use of sales incentives is also diminishing. The share of builders offering some form of incentive dropped to 58% in February, down from 62% in January and the lowest share since last August.
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