A report released by the National Association of Home Builders on Monday showed an unexpected improvement in U.S. homebuilder confidence in the month of March.
The report said the NAHB/Wells Fargo Housing Market Index rose to 51 in March from 48 in February. Economists had expected the index to come in unchanged.
With the unexpected increase, the housing market index surpassed the breakeven point of 50 for the first time since hitting 56 last July.
“Buyer demand remains brisk and we expect more consumers to jump off the sidelines and into the marketplace if mortgage rates continue to fall later this year,” said NAHB Chairman Carl Harris.
He added, “But even though there is strong pent-up demand, builders continue to face several supply-side challenges, including a scarcity of buildable lots and skilled labor, and new restrictive codes that continue to increase the cost of building homes.”
The unexpected increase by the headline index was partly due to a notable advance by the component charting current sales conditions, which jumped to 56 in March from 52 in February.
The component measuring sales expectations in the next six months also climbed to 62 in March from 60 in February, while the component gauging traffic of prospective buyers rose to 34 in March from 32 in February.
On Tuesday, the Commerce Department is scheduled to release a separate report on new residential construction in the month of February.
Housing starts are expected to jump to an annual rate of 1.435 million in February after plunging to a rate of 1.331 million in January.
Building permits, an indicator of future housing demand, are also expected to rise to a rate of 1.500 million in February after falling to a rate of 1.470 million in January.
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