The NAHB/Wells Fargo housing market index is up to 44 in March from an unrevised 42 in February. The index is above the consensus of 41 in an Econoday survey. The index is up for a third month in a row and reflects a modest increase in sales activity and buyer traffic that has followed on the dip in mortgage interest rates after the near-term peak of 6.90 percent in October 2022 for the Freddie Mac 30-year fixed mortgage rates. Although the report noted that there is pent-up demand for new single-family homes, recent rises in mortgage rates suggest future sales will be slower. The Freddie Mac rate bottomed at an average of 6.30 percent in January, rose to 6.34 percent in February, and is at 6.73 percent for March to-date.

The index for single-family home sales is up 2 points to 49 in March and the buyer traffic index is up 3 points to 31. For buyers able to pre-qualify for a mortgage and lock in a lower rate, some shopping will take place in March with pressure to commit before the lock expires. The index for expected sales of single-family homes is down 1 point to 47 in March as builders are concerned that higher rates and construction costs will price potential buyers out of the market. The report also noted that recent stress in financial markets and anticipation of higher interest rates make the outlook even more uncertain for homebuilders.

The housing market index rebounded 4 points in January and another 7 points in February but further improvement, given a sharp rise in mortgage rates, is not expected for March where the consensus is a 1 point decline to 41.

The housing market index is a monthly composite that tracks home builder assessments of present and future sales as well as buyer traffic. The index is a weighted average of separate diffusion indexes: present sales of new homes, sales of new homes expected in the next six months, and traffic of prospective buyers of new homes.

This report provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as the housing market index, investors can gain specific investment ideas as well as broad guidance for managing a portfolio. Whether the housing market index reflects new home sales or home resales, once a home is sold, it generates revenues for the realtor and the builder. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items home buyers might purchase. The economic"ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month. Since the economic backdrop is the most pervasive influence on financial markets, home sales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the existing home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.