Homebuilder Confidence Jumps as Falling Rates Boost Affordability
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Homebuilder confidence surged in January as mortgage rates fell, hitting 44 on the NAHB housing market index. This marks the second straight monthly increase.
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Lower interest rates have improved affordability and brought some buyers back after higher borrowing costs sidelined them.
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31% of builders reported cutting home prices in January, down from 36% the prior two months. The typical price reduction was 6%.
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Mortgage applications jumped 10.4% last week as rates trended lower. Purchase applications rose 9% but are still 20% lower than a year ago.
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If rates keep falling, the MBA is "cautiously optimistic" home purchases will increase in coming months due to pent-up demand.