After a year-long rout, the increase in US homebuilder sentiment in February by more than forecast, suggesting mortgage rates have eased over the past several months is helping support the housing market.

According to Wednesday’s figures, the National Association of Home Builders/Wells Fargo gauge gained 7 points, the biggest increase since mid-2020. In a Bloomberg survey of economists, the median estimate called for a reading of 37.

A pickup in prospective-buyer traffic and optimism about sales helped boost sentiment to a five-month high. As we enter the critical spring selling season, there is cautious optimism despite a tough 2022 for real estate.

In a statement, Robert Dietz, NAHB chief economist, said that even with the Federal Reserve continuing to restrict monetary policy conditions, this cycle’s peak mortgage rates have been passed by the housing market as indicated in the forecasts.

According to him, although mortgage rates and housing costs are expected to remain volatile, the building market should stabilize in the coming months, followed by a rebound back to home construction trend levels later in 2023 and in early 2024.

There is an increase of 11 points to 48 in sales expectations for the next six months, the highest since July, according to the NAHB report. The current sales measure of the group increased to a five-month high. On the other hand, since September the traffic of an index of prospective-buyer was the strongest.

All four regions of the US reported an increase in builder sentiment.