Builders hoping for rate cuts, buyers still facing pricy options

The February NAHB home builder survey rose 4 pts m/o/m to 48 and that was 2 pts above the estimate. The present situation got back above 50 at 52 from 48. The future is where the optimism really reigns as it was up 3 pts to 60. Keeping the headline though below 50 was the 33 print on Prospective Buyers Traffic, though up 4 pts m/o/m but remains well below 50. So, builders are more positive but they need more people to visit their offerings.

The optimism lies in the hope the Fed cuts rates this year and that mortgage rates will fall in response. I think if the Fed notably cuts short term interest rates, long rates would actually rise, providing little relief for a 30 yr mortgage rate but I could very well be wrong. Either way, the average 30 yr mortgage rate is up 40 bps in February alone to 7.29% according to Bankrate, highlighting the still big affordability challenge for first time buyers when you add on the continuous rise in home prices.