The National Association of Homebuilders (NAHB) announced its housing market index (HMI) rose four points to 62 in February. That was the highest reading since October 2018.

Economists forecast the HMI to increase to 59.

A reading over 50 indicates more builders view conditions as good than poor.

All three HMI components were higher this month. The current sales measure increased three points to 67 in early February. At the same time, the index charting expectations in the next six months rose five points to 68 and the indicator measuring buyer traffic went up four points to 48.

NAHB Chairman Randy Noel noted: “Ongoing reduction in mortgage rates in recent weeks coupled with continued strength in the job market are helping to fuel builder sentiment. In the aftermath of the fall slowdown, many builders are reporting positive expectations for the spring selling season.”

Meanwhile, NAHB Chief Economist Robert Dietz said: “Builder confidence levels moved up in tandem with growing consumer confidence and falling interest rates... However, affordability remains a critical issue. Rising costs stemming from excessive regulations, a dearth of buildable lots, a persistent labor shortage and tariffs on lumber and other key building materials continue to make it increasingly difficult to produce housing at affordable price points.”