US homebuilder confidence rises in March, according to NAHB

US homebuilder confidence rose to an index print of 51 in March, higher than what was expected, as reported by the National Association of Home Builders (NAHB). Yahoo Finance Live breaks down the data and what the housing sector is expecting from the Federal Reserve's March FOMC policy decision.

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Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

SEANA SMITH: We want to get to some breaking news. Homebuilder confidence rising once again in March hitting 51. That was compared to the 48 reading that we got the prior month here. But 51, that's passing the break-even point. The first time that we have seen a break above 50 since July.

It's the highest reading that we've seen since July of 2023. Also marks the fourth month in a row that we have seen a gain for the index. So why are homebuilders feeling a bit better about the landscape right now? A couple of things are going into it.

One, the lack of inventory of existing homes. That is a factor that we have been talking about now for quite some time. So it's driving those would-be buyers to new home construction, almost the only game in town at this point.

Also the fact that we've seen mortgage rates pull back just a bit from the peak levels that we saw in the fall. That's helping builder sentiment at least at this point here. So again, Brad, we talk about the current landscape right now for the real estate sector.

The fact that existing homes still inventory levels, yes, they have improved just a bit, but they are well below what we typically see when you compare it to historic norms. Homebuilders then picking up some of that slack as best as they can, and because of that, we've seen a boost here in their confidence ratings.

BRAD SMITH: What is the conversation without homes without what the Fed is doing here. And we've got that from the Chief Economist Robert Dietz over at the NAHB saying with the Federal Reserve expected to announce future rate cuts in the second half of 2024, lower financing costs will draw many prospective buyers into the market.

Goes on to say, however, as homebuilding activity builds up and picks up, builders will likely grapple with rising material prices, particularly, once again and stop me if you've heard this before, for lumber. So that's going to be one important commodity to continue to watch going towards the back half of this year as well.