June Builder Confidence Remains ‘Solid’ Despite Slight Drop

Builder confidence in the market for newly built single-family homes fell two points to 64 in June, the National Association of Home Builders reported yesterday.

The NAHB/Wells Fargo Housing Market Index reported all indices inched lower in June. The index measuring current sales conditions fell one point to 71; the component gauging expectations in the next six months moved two points lower to 70; and the metric charting buyer traffic dropped one point to 48.

Regional three-month moving averages showed the Northeast posted a three-point gain to 60; the Midwest rose by three points to 57; the West held steady at 71; and the South fell a single point to 67.

NAHB Chief Economist Robert Dietz said sentiment levels have held at a solid range in the low- to mid-60s for the past five months. “While demand for single-family homes remains sound, builders continue to report rising development and construction costs, with some additional concerns over trade issues,” he said.

Dietz added despite lower mortgage rates, home prices remain somewhat high relative to incomes, “which is particularly challenging for entry-level buyers. And while new home sales picked up in March and April, builders continue to grapple with excessive regulations, a shortage of lots and lack of skilled labor that are hurting affordability and depressing supply.”

Last week, the Mortgage Bankers Association reported mortgage applications for new home purchases increased by 0.1 percent in May from April and by 20.1 percent from a year ago, the Mortgage Bankers Association reported this morning. The average loan size of new homes decreased from $338,745 in April to $330,311 in May.

MBA estimated new single-family home sales at a seasonally adjusted annual rate of 727,000 units in May, an increase of 0.7 percent from the April pace of 722,000 units. On an unadjusted basis, MBA estimated 69,000 new home sales in May, unchanged from April.