A combination of factors including lack of existing-housing inventory, strong homebuyer demand, and softening mortgage rates helped push builder sentiment in March above the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) breakeven point of 50, NAHB's Eye On Housing reports.
Builder confidence in the market for newly built single-family homes has continued to climb for the past four months and increased by three points from 48 in February to 51 in March, the highest level since July 2023.
With mortgage rates below 7% since mid-December per Freddie Mac, more builders are cutting back on reducing home prices to boost sales. In March, 24% of builders reported cutting home prices, down from 36% in December 2023 and the lowest share since July 2023. However, the average price reduction in March held steady at 6% for the ninth straight month. Meanwhile, the use of sales incentives is holding firm. The share of builders offering some form of incentive in March was 60%, and this has remained between 58% and 62% since last September.
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