Builder confidence in the housing market rose two points to a level of 58 in January, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
The increase follows two months of confidence level declines and was bolstered by a recent fall in mortgage rates, according to NAHB Chairman Randy Noel.
“Low unemployment, solid job growth and favorable demographics should support housing demand in the coming months,” Noel added in a statement.
NAHB Chief Economist Robert Dietz said builders will need to continue to manage rising construction costs to keep home prices affordable.
“Lower interest rates that peaked around 5 percent in mid-November and have since fallen to just below 4.5 percent will help the housing market continue to grow at a modest clip as we enter the new year,” Dietz stated.
Due to the current government shutdown, housing start data for December will not be released by the U.S. Census Bureau this week. NAHB estimates that single-family housing starts grew 3 percent year-over-year in December.