Builder confidence is rising again after holding steady for the past four months.
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), which measures confidence in the market for newly constructed single-family homes, rose two points in June to a level of 60. That's the highest reading since January.
“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 HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The monthly survey 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.
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, and the component measuring buyer traffic climbed three points to 47.
Looking at the three-month moving averages for regional HMI scores, the South rose two points to 61 and the West rose one point to 68. The Northeast dropped two points to 39 and the Midwest fell one point to 57.
“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,” said NAHB Chief Economist Robert Dietz