ConDig (19-Mar-19).  US homebuilders remain positive about the market’s near-term outlook as a drop in mortgage rates has made homes more affordable.

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) for newly-built single-family homes held steady at 62 in March. But the index stood at 70 in March last year. Anything above 50 is considered positive.

“Builders report the market is stabilizing following the slowdown at the end of 2018 and they anticipate a solid spring home buying season,” said NAHB chairman Greg Ugalde.

The positive sentiment is being underpinned as mortgage rates have fallen to below year-ago levels after rising throughout most of last year, which has helped to help make homes more affordable.

“In a healthy sign for the housing market, more builders are saying that lower price points are selling well, and this was reflected in the government’s new home sales report released last week,” said NAHB chief economist Robert Dietz. 

“Increased inventory of affordably priced homes – in markets where government policies support such construction – will enable more entry-level buyers to enter the market.”

But the association said that builders remain concerned over affordability amid a skilled worker shortage, lack of buildable lots and stiff zoning restrictions in many major metro markets.

Construction industry leaders continue to warn that rapidly rising materials costs and a deepening shortage of labor could delay some projects and make others financially unviable.

A rise in material costs has been exacerbated follow a decision by President Trump to slap a 25% tariff on imported steel and a 10% duty on foreign aluminum from Canada, Mexico and the European Union on May 31.