July Builder Confidence Rises One Point
Builder confidence in the market for newly built single-family homes rose one point to 65 in July, the National Association of Home Builders reported yesterday, marking the sixth consecutive month that sentiment levels have held at a steady range in the low- to mid-60s.
The NAHB/Wells Fargo Housing Market Index said all its indices inched higher in July. The index measuring current sales conditions rose one point to 72; the component gauging expectations in the next six months moved a single point higher to 71; and the metric charting buyer traffic increased one point to 48.
Looking at the three-month regional moving averages, the South moved one point higher to 68 and the West rose by one point to 72. The Northeast remained unchanged at 60 while the Midwest fell a single point to 56.
NAHB Chief Economist Robert Dietz said builders reported “solid demand” for single-family homes. “However, they continue to grapple with labor shortages, a dearth of buildable lots and rising construction costs that are making it increasingly challenging to build homes at affordable price points relative to buyer incomes.”
Dietz noted even as builders try to rein in costs, home prices continue to outpace incomes. “The current low mortgage interest rate environment should be getting more buyers off the sidelines, but they remain hesitant due to affordability concerns,” he said. “Still, attractive rates should help spur new home purchases in large metro suburban markets, where approximately one-third of new construction takes place.”
Last week, the Mortgage Bankers Association reported its Builder Application Survey data for June show mortgage applications for new home purchases fell by 14 percent from May, but rose by nearly 18 percent from a year ago.
MBA estimated new single-family home sales at a seasonally adjusted annual rate of 646,000 units in June, a decrease of 11.1 percent from the May pace of 727,000 units. On an unadjusted basis, MBA estimated 58,000 new home sales in June, a decrease of 15.9 percent from 69,000 new home sales in May.
