The future for home sales brightened in February, according to a builders’ trade group. Yet new mortgage data show the path might be choppy.
Home builder sentiment improved in February, the National Association of Home Builders said Wednesday. This month’s reading, the second consecutive increase following a full year of declines, brought the index to its highest level since September 2022.
Of the index’s sub-components, expectations of sales in the next six months increased the most, to a reading of 48 from a reading of 37 in January. The two other components, measuring current sales conditions and buyer traffic, also gained.
“While we expect ongoing volatility for mortgage rates and housing costs, the building market should be able to achieve stability in the coming months, followed by a rebound back to trend home construction levels later in 2023 and the beginning of 2024,” National Association of Home Builders Chief Economist Robert Dietz said in a statement.
Such volatility appeared in the Mortgage Bankers Association’s most recent weekly measure of mortgage application volume, also released Wednesday. Volume overall last week declined a seasonally-adjusted 8% last week, according to the Mortgage Bankers Association.
Purchase applications dropped a seasonally-adjusted 5% from the week prior, while refinance applications fell 13%. Both the purchase index and overall index were at their lowest points since the start of the year, while refinance activity declined to late January levels.
The pullback came as the average fixed-rate 30-year mortgage rates measured by the association rose, to 6.39% from 6.18% one week earlier. Economic data likely contributed to the increase. The 10-year Treasury yield, with which mortgage rates often move, rose last week on the heels of January’s hotter-than-expected jobs report.