Home builder sentiment increased in October, rising to a score of 43 on the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).
Builders cited gradually easing inflation and the prospect of lower mortgage rates as reasons for their increased optimism.
“While housing affordability remains low, builders are feeling more optimistic about 2025 market conditions,” says Carl Harris, chairman of NAHB, in a statement. “The wild card for the outlook remains the election, and with housing policy a top tier issue for candidates, policymakers should be focused on supply-side solutions to the housing crisis.”
“Despite the beginning of the Fed’s easing cycle, many prospective home buyers remain on the sideline waiting for lower interest rates,” adds Robert Dietz, chef economist for NAHB. “We are forecasting uneven declines for mortgage interest rates in the coming quarters, which will improve housing demand but place stress on building lot supplies due to tight lending conditions for development and construction loans.”
The latest HMI survey also reveals that the share of builders cutting prices held steady at 32% in October, the same rate as last month.
Meanwhile, the average price reduction returned to the long-term trend of 6% after dropping to 5% in September.
The use of sales incentives was 62% in October, up slightly from 61% in September.
Photo: Annie Gray