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Falling Mortgage Rates Boost Homebuilder Sentiment

The U.S. housing market shows signs of revival as lower mortgage rates spur increased interest from prospective buyers.

Overview

  • Homebuilder sentiment in the U.S. housing market has rebounded in December from an 11-month low as high mortgage rates begin to fall.
  • The National Association of Home Builders/Wells Fargo Housing Market Index, which measures the pulse of the single-family housing market, rose three points to 37, slightly more than expected.
  • Over the past seven weeks, the average 30-year fixed mortgage rate in the U.S. has fallen from a 23-year high of 7.79% to 6.95%.
  • Builders are reporting an uptick in traffic as some prospective buyers who previously felt priced out of the market are taking a second look.
  • The housing market appears to have passed peak mortgage rates for this cycle, and this should help to spur home buyer demand in the coming months.