Chart of the Day: Home Builders Aren't Sweating Higher Mortgage Rates

The National Association of Home Builder monthly sentiment index (January's results just released) -- one of the 79 inputs to our macro model -- suggests that while housing contractors are struggling with shortages of land and labor, they aren't sweating the prospects for higher mortgage rates in the least:

U.S. Home Builders’ Confidence in February Holds at 72

(Bloomberg) --
Following is a summary of U.S. housing activity from the National Association of Home Builders/Wells Fargo.

• “Builders are excited about the pro-business political climate that will strengthen the housing market and support overall economic growth,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “However, they need to manage supply-side construction hurdles, such as shortages of labor and lots and building material price increases.”

• Jan. index for the Northeast revised down two points; south revised up by one point

• The HMI component charting sales expectations in the next six months rose two points to 80 - the highest level since June 2005

Here's our chart, above 50 denotes net optimism:   click to enlarge

Like we keep saying, higher rates at this juncture -- while they'll for sure play short-term havoc with stock prices -- should be viewed as confirmation that the economy's on firm footing.