Home builder sentiment climbs for third straight month

More economic data rolls out this week as home builder sentiment reports a third consecutive month of gains, according to the National Association of Home Builders (NAHB). Yahoo Finance Housing Reporter Dani Romero details the rise in home builder confidence as the index rose to 48 points in February. Romero goes on to outline trends in incentives to prospective homebuyers and homebuilder stocks.

The NAHB issued a correction on its initial press release, amending that February's print is the highest level seen since August 2023, not August 2022.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

- Economic data out for you here this morning. Home builder sentiment rises for the third consecutive month. We have our very own Dani Romero here with the details. Hey, Dani.

DANI ROMERO: Hi, Brad. Well, Homebuilders are feeling a lot more confident in February. The National Association of Home Builders reported that the index rose four points to 48 points in February. And builders are expecting for more buyer appetite to enter the market as these mortgage rates soften a bit. But what stood out to me from this report is really that builders will be pulling back on incentives. 20%, 25% of builders reported cutting home prices-- that's down from 31% in January.

While meanwhile, the share of builders offering some form of an incentive dropped to 58% in February-- that's down from 62% in January. So that's really different from what the public home builders have been saying on their earnings call. We've heard from DR Horton, Lennar. They've really pointed out that they are not going to be pulling back on incentives, especially that popular incentive, the mortgage rate buy down-- that is when you upfront the builder, upfronts the cost to lower the rate on the loan.

But another thing that really stood out to me from this report is the sales expectations in the next six months. That rose three points to 60, and any number that is higher than 50 really signals a good market. So that really does signal that they are confident about this market, that there will be some rebound and some turnaround ahead.

- I'm sure even without those incentives people trying to jump into that market. Appreciate you, our very own, Dani Romero.