Homebuilder sentiment rose for the second consecutive month, according to the latest report from the National Association of Homebuilders. Builder confidence in the market increased seven points in February to 42 – the second strongest reading since September 2022.

This latest report, driven by softening mortgage rates and increasing demand for inventory, comes despite rising costs of construction and continued supply chain hiccups.

“With the largest monthly increase for builder sentiment since June 2013, excluding the period immediately after the onset of the pandemic, the HMI indicates that incremental gains for housing affordability have the ability to price-in buyers to the market,” said NAHB Chairman Alicia Huey

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) considers any reading over 50 to be of positive sentiment and reflects an overall confident attitude from builders. This is based on results from a monthly survey which gauges builder attitudes towards indicators like sales expectations and buyer traffic.

Builders are continuing to respond to shifting market conditions throughout the last few months. Of the homebuilders surveyed, 57% offered some form of incentive in February to elicit buyer activity.

However, mortgage rates are still pricing out many potential buyers. An average 30-year fixed-rate mortgage sat at 6.88% this week.