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Builder Confidence Hits Its Highest Level All Year
Encouraged by continuing low mortgage rates and robust demand for new homes, single-family home builders voiced more confidence this June than they have all year in the latest NAHB/Wells Fargo Housing Market Index (HMI). The index rose this month by one point to 71, its highest level since last December.
“The favorable financing climate for new homes is proving too attractive for many buyers to pass up, so builders are staying very busy this summer,” said NAHB President Dave Wilson.
“In the past four weeks, the average rate on a 30-year mortgage declined 21 basis points, ending at 5.56% as of June 9,” noted NAHB Chief Economist David Seiders. “Combined with the very solid appreciation rates we’ve seen, and the widespread expectation that mortgage rates will begin creeping up soon, that’s a powerful incentive to make a move,” he agreed.
Derived from a monthly survey that NAHB has been conducting for almost 20 years, the index gauges builder perceptions of current single-family home sales, sales expectations for the next six months and the traffic of prospective buyers. Any score over 50 indicates that more builders view sales conditions as good than poor.
All three components of the index moved up this month: the current sales index climbing by one point to 77; sales expectations rising by two points to 79; and prospective traffic at 54, up one point.
Regionally, builders were most optimistic in the West, with an overall reading of 88, up by four points from May, far outpacing the scores from builders in other parts of the country. The confidence of builders in the South climbed by one point to 76; remained unchanged at a solid 70 in the Northeast; and rose two points to a positive reading of 52 in the Midwest.
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