Builder confidence for newly constructed single-family homes in June increased to its highest level since January after holding steady for four consecutive months, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market [1] Index (HMI) released Thursday.
According to the NAHB, the NAHB/Wells Fargo HMI gauges 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.” Any number over 50 indicates that more builders view conditions as good than poor. Builder confidence rose to 60 in June after holding at 58 for four straight months and is at its highest level since posting a reading of 61 in January.
The HMI is now seven points lower than its recent peak of 65 in October, but the index is still well above the tipping point of 50.
All three components of the HMI increased over-the-month in June, according to NAHB: current sales conditions ticked up by a point from 63 to 64; the component that measures sales expectations for the next six months increased from 65 to 70; and the component of the index that measures buyer traffic jumped from 44 to 47.
The sales expectations component has risen by eight points in the last two months; June’s five-point spike followed a three-point increase from April to May, according to NAHB.
“The fact that future sales expectations rose slightly this month shows that builders are confident that the market will continue to strengthen,” NAHB Chief Economist Robert Dietz said in May. “Job creation, low mortgage interest rates and pent-up demand will also spur growth in the single-family housing sector moving forward.”
