Despite a recent sharp rise in mortgage rates, homebuilders are feeling more confident about the real estate market.

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index rose two points to 43 in October from the previous month, marking its second straight monthly gain. The October reading was above economists’ estimates of 42, according to Bloomberg data.

Still, any value below 50 suggests that more builders view conditions as poor rather than good.

“While housing affordability remains low, builders are more optimistic about market conditions in 2025,” said NAHB Chairman Carl Harris, a custom home builder from Wichita, Kan., in a news release.

Mortgage rates have been rising recently, with the average interest rate on a 30-year fixed-rate loan rising to 6.32% last week from 6.12% a week earlier, the largest weekly increase since April, according to Freddie Mac. Mortgage rates, which tend to follow U.S. Treasury yields, have risen recently as strong job growth and persistent inflation prompt traders to scale back their expectations for the Fed’s aggressive rate cut.

The NAHB survey also found that more builders offered concessions in October. The survey found that 62% of builders used some type of sales incentive to close the deal, up from 61% in September. Meanwhile, 32% of builders cut home prices in October, similar to last month, to boost sales. The average price reduction was 6%, down from 5% the previous month.

The indicator measuring sales prospects for the next six months rose 4 points to 57. The potential buyer traffic indicator and the NAHB current selling conditions index also rose two points each in October.