Home builder confidence rose for the third month in a row, even as mortgage rates climbed higher for buyers.

That’s according to a March report from the National Association of Home Builders that looked at existing sales, buyer traffic and the sales outlook for new construction homes over the next six months.

This was the strongest performance for the index since September.

After a positive pivot in January for the first time in over a year, the recovery in housing construction is expected to continue as construction prospects improve and inflation cools. This is good news for homebuyers, who are facing low inventory amid a decades-long national shortage in construction.

Recent volatility concerns in the banking system, however, are creating more volatility in interest rates and uncertainty for builders.

Mortgage rates had increased by more than half a percentage point over the previous month. After recent bank failures, mortgage rates have been falling as investors flock to the relative safety of bonds.

“Despite the expected recovery in mortgage rates and an improvement in sentiment, builders remain highly uncertain about the near- and medium-term outlook,” said Alicia Huey, president of the NAHB.

NAHB chief economist Robert Dietz said regional banks are under pressure due to banking instability, as well as continued Fed tightening, there will be further constraints for homebuilders’ acquisition, development and construction (AD&C) loans.

And that will eventually be passed on to the buyers.

“When AD&C loan conditions are tight, a lot of inventory gets compressed and adds an additional constraint to housing affordability,” he said. “The cost and availability of housing inventory remains a significant barrier for potential home buyers.”