NEW YORK, March 18 (Reuters) - U.S. home builder

confidence rose in March to the highest level since July due to

lower mortgage rates and an improved pricing environment amid a

continued existing home inventory shortage, the National

Association of Home Builders said on Monday.

The NAHB/Wells Fargo Housing Market Index of builder

confidence rose to 51 this month from an unrevised 48 in

February. A Reuters poll showed economists expected the outlook

to remain unchanged at 48 in March.

"Buyer demand remains brisk and we expect more consumers to

jump off the sidelines and into the marketplace if mortgage

rates continue to fall later this year," NAHB Chairman Carl

Harris said in a statement.

Traffic slowed during the second half of last year on the

back of the Federal Reserve's interest rate hikes, which were

launched in March of 2022 in an effort to curb rising inflation.

The monetary policy tightening drove the average rate on the

30-year fixed-rate mortgage to two-decade highs near 8% in

October.

With the U.S. central bank likely near the end of its rate

hiking cycle, the 30-year fixed-rate mortgage averaged 6.74% for

the week ended March 14, according to Freddie Mac. The drop has

drawn buyers from the sidelines, raising the index of

prospective buyers from a 13-month low of 21 in November to 34

in March, the highest since August 2023, according to the NAHB.

The easing of mortgage rates has also allowed builders to

hold off on slashing home prices. As recently as December, more

than a third of builders reported offering price concessions. In

March, that was down to 24%, the lowest level since July 2023,

the NAHB said, but 60% were still offering some form of

incentive.

The boost in builders' sentiment may lead to an increase

in single-family home starts throughout 2024, according to Nancy

Vanden Houten, lead economist at Oxford Economics.

"More than half of home builders continue to offer some

kind of incentive to encourage sales," she said. "Those

incentives, along with a shortage of existing homes for sale and

an increase in single-family housing starts, should support new

home sales in the months ahead."

The U.S. government is scheduled on Tuesday to release

housing starts and building permits data for February, with a

Reuters poll indicating both likely rebounded from their drops

in January. New home sales are expected to have risen for a

third straight month in February, according to another Reuters

poll - that data is due to be released next week.