Homebuilder sentiment is an important gauge of housing market health. Builders, after all, have to be able to accurately read the market in order to know when and where to build homes. Their success depends on it. That's why the National Association of Home Builders' monthly Housing Market Index is a closely watched market metric.
When builders are feeling optimistic, it's a good sign that things are headed in the right direction. That's why the NAHB's most recent release is such welcome news. Builder confidence rose seven points to 42 on a scale where any number above 50 indicates more builders view market conditions as good than poor.
Robert Dietz, NAHB's chief economist, says the improvement is a positive development. “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,” Dietz said. “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.”
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