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First Cut: NAHB/Wells Fargo Housing Market Index 62 in February, highest since October 2018

It looks like lower mortgage interest rates have worked a cure in February for builders’ declining perceptions of the housing market. The NAHB/Wells Fargo Housing Market Index was up 4 points to 62 in February, the highest since 68 in October when mortgage rates were climbing.  The level was above market expectations and constitutes goods news after several months of generally gloomy reports related to the housing market.

In February, the index components showed a 3 point rise to 67 for single-family sales, 5 points higher to 68 for expected sales of single-family homes, and a 4 point gain to 48 for buyer traffic.

For February to-date, the Freddie Mac 30-year fixed rate has fallen to 4.39%, the lowest since 4.33% in February 2018. The rate is down 48 basis points from the near-term peak of 4.87% in November 2018.

Along with less rapid increases in home prices, lower mortgage rates will encourage potential buyers to enter the market for new housing. The limited supply of existing units may also help increase sales of newly built properties.

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