The National Association of Home Builders (NAHB) released a report on Tuesday indicating a more-than-anticipated rise in homebuilder confidence in the U.S. for September.
According to the report, the NAHB/Wells Fargo Housing Market Index increased to 41 in September, up from 39 in August. Economists had predicted a modest rise to 40.
This uptick halts four consecutive months of decline, with the index recovering from its lowest level since it reached 37 last December.
“Thanks to lower interest rates, builders now have a positive outlook for future new home sales for the first time since May 2024,” stated NAHB Chairman Carl Harris. “However, the high construction costs relative to household budgets are curbing some of the optimism about the current housing market.”
Harris further noted, “Additionally, builders will contend with rising competition from increasing existing home inventories in many markets as the mortgage rate lock-in effect diminishes with lower rates.”
The slightly greater-than-expected rise in the headline index is attributed to the component measuring sales expectations for the next six months, which surged to 53 in September from 49 in August.
The metric tracking prospective buyer traffic also increased to 27 in September from 25 in August, while the index reflecting current sales conditions edged up to 45 from 44 in the previous month.
The NAHB also highlighted that the proportion of builders reducing prices fell in September for the first time since April, decreasing by one point to 32 percent.
The average price reduction stood at 5 percent, marking the first time it has been below 6 percent since July 2022.
Additionally, the Commerce Department is set to release a separate report on new residential construction for August on Wednesday.
