Home builders have turned “cautiously optimistic,” the National Association of Home Builders said Wednesday, suggesting that the housing market could already be turning a corner.
The National Association of Home Builders’ (NAHB) housing market index (HMI)—which is based on a survey of builders of single-family homes—rose to 42 in February from 35 in January. This was the largest monthly increase since June 2013 and the highest reading since September. Sentiment has now improved for two consecutive months.
The index beat expectations for an increase to 37.
“While the HMI remains below the breakeven level of 50, the increase from 31 to 42 from December to February is a positive sign for the market,” said NAHB Chief Economist Robert Dietz. “Even as the Federal Reserve continues to tighten monetary policy conditions, forecasts indicate that the housing market has passed peak mortgage rates for this cycle.”
The index measuring current sales conditions increased to 46 from 40 in the January reading. Sales expectations for the next six months jumped to 48 from 37. The gauge of foot traffic of prospective buyers climbed to 29 from 23.
Mortgage rates peaked in October and have since fallen. The average rate on a 30-year fixed mortgage has declined from 7.08 in November to 6.12 percent last week.
Construction payrolls have continued to grow despite what many viewed as a recession for the housing market. In January, construction payrolls rose by 25,000 following a 26,000 rise in December. The Labor Department’s Job Openings and Labor Turnover Survey indicated that construction firms were looking to hire 413,000 workers at the end of last year. Total employment in construction rose by 294,000 last year to a record high of nearly 7.9 million.