Confidence among U.S. single-family homebuilders improved for the first time in more than a year in January, potentially signaling the housing slump may have reached its low point even as construction firms' sentiment remains decidedly bearish.

The National Association of Home Builders on Wednesday said its NAHB/Wells Fargo Housing Market index rose four points to 35 this month, matching the high end of estimates of 27 economists in a Reuters poll and exceeding the median view of 31. A reading above 50 indicates that more builders view conditions as good rather than poor.

January's uptick snapped a record-long string of 12 consecutive monthly declines that had dragged the index to the lowest since June 2012, aside from the brief plunge in the spring of 2020 at the onset of the coronavirus pandemic.

"It appears the low point for builder sentiment in this cycle was registered in December, even as many builders continue to use a variety of incentives, including price reductions, to bolster sales," said NAHB Chairman Jerry Konter, a home builder and developer from Savannah, Georgia. "The rise in builder sentiment also means that cycle lows for permits and starts are likely near, and a rebound for home building could be underway later in 2023."

The housing market has seen the most pronounced effects so far of the Federal Reserve's aggressive interest rate hikes aimed at quashing inflation that continues to hold at unacceptably high levels. Interest rates on the most popular type of U.S. home loan topped 7% - the highest since 2001 - in October, and sales of new and existing homes tumbled by more than 35% from January through November.

Since March, the U.S. central bank has lifted its benchmark policy rate from near zero to a range of 4.25%-4.50%. It indicated at its meeting last month that rate hikes will continue into this year until it is fully confident inflation is declining from the four-decade highs touched in mid-2022 back toward its targeted level of 2% at an annual rate.

Mortgage rates have eased recently, though, as investors betting the Fed is near the end of its rate hikes have driven down yields on the Treasury securities that determine home borrowing costs. Last week the contract rate on a 30-year fixed-rate mortgage fell to the lowest since September and loan application volumes increased, another potential indication of a bottom for the housing slump.

NAHB said all four regions saw improved sentiment and the index tracking expectations for future sales rose for a second month. Its gauge of buyer traffic also ticked higher.