Sentiment underneath
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Builder sentiment has improved so far this year, although it is still well below pre-pandemic levels. A measure of expected sales over the next six months rose to 62, the highest since June. Meters of potential buyer traffic and current sales rose to the highest level in seven months, NAHB data showed.
Even with the recent rebound, builder sentiment could remain below the long-term average until financing costs decline more significantly
“With the Federal Reserve expected to announce future interest rate cuts in the second half of 2024, lower borrowing costs will attract many potential buyers to the market,” Robert Dietz, NAHB’s chief economist, said in a statement.
In recent months, builders have generally cut back on the price incentives they have offered to consumers to boost sales. In March, 24% of construction companies reported that they had reduced prices, compared to 36% in December and the lowest percentage since July.
The share of builders offering customers some form of incentives stood at 60% in March and has fluctuated between 58% and 62% since September, the NAHB said.
Builder sentiment rose 11 points in the Midwest to 49 in March, the highest of any region, while it also rose slightly in the South. Sentiment fell slightly in the northeast and west.
The government will offer a snapshot of housing construction on Tuesday when it releases data on February housing starts and building permits.