Builders are exuding more confidence in the real estate market as more buyers purchase homes with unwavering certainty. According to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), builder confidence in the market for newly built, single-family homes in June reached a high of 59. This is an increase of five points from last month and the highest reading this year since September 2014.
“Builders are reporting more serious and committed buyers at their job sites and this is reflected in recent government data showing that new-home sales and single-family construction are gaining momentum,” said Tom Woods, NAHB chairman and a home builder from Blue Springs, Missouri.
The NAHB/Wells Fargo Housing Market Index is a monthly survey that the organization has been conducting for 30 years, the association said. The data determines builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair,” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average,” or “low to very low.” These scores are used to find a seasonally adjusted index that deems any number over 50 to mean that more builders are in favor of good conditions rather than poor conditions.
According to the index, all three HMI components saw healthy gains in June. The component that determines current sales conditions rose seven points to 65, while the component that predicts future sales for the next six months increase six points to 69. The component measuring buyer traffic increased five points to 44.
The index also found that the three-month moving averages for regional HMI scores posted increases in every region except the Midwest. The South and Northeast both increased by three points to 60 and 44, respectively. Meanwhile, the West increased by two points to 57 and the Midwest dropped by one point to 54.
“The HMI indices measuring current and future sales expectations are at their highest levels since the last quarter of 2005, indicating a growing optimism among builders that housing will continue to strengthen in the months ahead,” said David Crowe, NAHB’s chief economist. “At the same time, builders remain sensitive to consumers’ ability to buy a new home.”
Click here to view the complete NAHB/Wells Fargo Housing Market Index.