Homebuilder Confidence Hits a Milestone

Homebuilder Confidence Hits a Milestone

Posted 06/27/2013

homebuilder confidence Builder confidence nationwide appeared to turn a corner in June, according to the National Home Builders Association/Wells Fargo Housing Market Index.

Index results surged eight points to a reading of 52 – topping 50 for the first time in seven years.  Fifty is the magic number that divides builder optimism from pessimism. A reading above 50 indicates that more builders view sales conditions as good rather than poor.

“This is the first time the HMI has been above 50 since April 2006, and surpassing this important benchmark reflects that builders are seeing better market conditions as demand for new homes increases,” said NAHB Chairman Rick Judson in a prepared statement. Judson, a home builder and developer from Charlotte, N.C., attributed the shift to a shortage of existing-homes, which is driving more buyers to purchase new homes.

This is the index’s largest one-month jump since before the recession, when the number rose eight points between August and September 2002. The Housing Market Index is based on builders’ impressions of current single-family home sales and sales expectations for the coming six months. Builders also are asked to rate prospective buyer traffic as “high to very high,” “average,” or “low to very low.”

All three indicators posted gains in June. The index measuring current sales conditions increased eight points to 56, while the index gauging sales expectations rose nine points to 61, its highest level since March 2006. Traffic expectations rose seven points to 40 on the index scale.

NAHB Chief Economist David Crowe said builders finally are “experiencing some relief in the headwinds that are holding back a more robust recovery.”