ISTANBUL

Homebuilding sentiment in the US rose in September with falling mortgage rates, according to a report released Tuesday.

The National Association of Home Builders/Wells Fargo Housing Market Index came in at 41 in September, up two points from 39 in August.

While above 50 is considered positive for the housing sector, the index measures sentiment among homebuilders and is considered an important indicator for housing investment and consumer spending on appliances and furnishings, which affect the overall economy.

"Thanks to lower interest rates, builders now have a positive view for future new home sales for the first time since May 2024," Carl Harris, chair of the homebuilders' group, said in a statement.

"However, the cost of construction remains elevated relative to household budgets, holding back some enthusiasm for current housing market conditions," he added. "Moreover, builders will face competition from rising existing home inventory in many markets as the mortgage rate lock-in effect softens with lower mortgage rates."

Robert Dietz, the association's chief economist, said the Federal Reserve's monetary policy easing, which is widely expected to begin Wednesday, will produce downward pressure on mortgage interest rate, and also lower the interest rates on land development and home construction business loans.

"Lowering the cost of construction is critical to confront persistent challenges for housing affordability," he added.