June Builder Confidence Surges Following Shaky Spring

Two months ago, the National Association of Home Builders/Wells Fargo Housing Market Index suffered its biggest one-month drop in history, falling by more than 40 points to an eight-year low. This month, the Index rebounded back into positive territory.

The HMI jumped by 21 points to 58 in June (readings above 50 indicate a positive market). All the HMI indices posted gains in June: the HMI index gauging current sales conditions jumped 21 points to 63, the component measuring sales expectations in the next six months increased by 22 points to 68; and the measure charting traffic of prospective buyers jumped 22 points to 43.

Looking at the monthly average regional HMI scores, the Northeast surged 31 point to 48; the South jumped 20 points to 62, the Midwest posted a 19-point gain to 51 and the West jumped 22 points to 66.

NAHB officials said the report signaled that housing stands poised to lead a post-pandemic economic recovery. “As the nation reopens, housing is well-positioned to lead the economy forward,” said NAHB Chairman Dean Mon. “Inventory is tight, mortgage applications are increasing, interest rates are low and confidence is rising. And buyer traffic more than doubled in one month even as builders report growing online and phone inquiries stemming from the outbreak.”

“Housing clearly shows signs of momentum as challenges and opportunities exist in the single-family market,” said NAHB Chief Economist Robert Dietz. “Builders report increasing demand for families seeking single-family homes in inner and outer suburbs that feature lower density neighborhoods. At the same time, elevated unemployment and the risk of new, local virus outbreaks remain a risk to the housing market.”

The NAHB report comes off a similarly positive report this week from the Mortgage Bankers Association, which reported its Builder Applications Survey increased by 26 percent from April and by 10.9 percent from a year ago. MBA estimated new single-family home sales at a seasonally adjusted annual rate of 672,000 units in May, based on data from the BAS, an increase of 26.1 percent from the April pace of 533,000 units. On an unadjusted basis, MBA estimated 65,000 new home sales in May, an increase of 27.5 percent from 51,000 new home sales in April.