Builder Confidence Up in June
Builder confidence in the market for newly constructed single-family homes rose for the first time in four months, the National Association of Home Builders reported yesterday.
The NAHB/Wells Fargo Housing Market Index rose by two points in June to 60, matching its highest reading since January. All three HMI components posted gains in June. The component gauging current sales conditions rose one point to 64; the index charting sales expectations in the next six months increased five points to 70; the component measuring buyer traffic climbed three points to 47.
Regionally, the South rose by two points to 61, while the West rose by one point to 68. The Northeast fell by two points to 39; the Midwest fell by one point to 57.
“Builders in many markets across the nation are reporting higher traffic and more committed buyers at their job sites,” said NAHB Chairman Ed Brady. “However, our members are also relating ongoing concerns regarding the shortage of buildable lots and labor and noting pockets of softness in scattered markets.”
The Index 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.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said increased optimism for future sales and buyer traffic pushed the index higher, which bodes well for home sales in the coming months. “The increase in builder optimism, gains in home sales and continued low mortgage rates are all positive factors pointing to continued gains for the housing sector in 2016,” he said.
NAHB Chief Economist Robert Dietz agreed. “Rising home sales, an improving economy and the fact that the HMI gauge measuring future sales expectations is running at an eight-month high are all positive factors indicating that the housing market should continue to move forward in the second half of 2016,” he said.
Earlier this week, the Mortgage Bankers Association Builder Application Survey data for May showed mortgage applications for new home purchases decreased by 6 percent from April, following an 11 percent decrease from April to March.
MBA estimated new single-family home sales at a seasonally adjusted annual rate of 488,000 units in May, based on data from the BAS, a 3 percent decrease April (503,000 units). On an unadjusted basis, MBA estimated 47,000 new home sales in May, a decrease of 2.1 percent from 48,000 in April.
