Confidence among U.S. home builders in June
jumped to its highest level in nine months, a sign the housing market may be
picking up steam after a sluggish winter.
The National Association of Home Builders’
confidence index rose five points to a reading of 59 in June, the industry
group said Monday. A reading above 50 means most builders generally hold a
favorable view of the market for newly built, single-family homes.
had expected a June confidence reading of 56.
Measures of current and future sales
expectations “are at their highest levels since the last quarter of 2005,
indicating a growing optimism among builders that housing will continue to
strengthen in the months ahead,” NAHB Chief Economist David Crowe said in a
“At the same time, builders remain sensitive
to consumers’ ability to buy a new home,” Mr. Crowe said.
The report, based on a survey of builders, showed that the gauge
of sales expectations for the next six months climbed six points to 69. The
measure of buyer traffic rose five points to 44 and the component for current
sales conditions jumped seven points to 65.
“The short-term relationship between the NAHB and the hard new
home sales numbers is very volatile, but the underlying message is clear
enough; we should expect a robust housing recovery during the summer and
beyond,” Pantheon Macroeconomics Chief Economist Ian Shepherdson
said in a note to clients.
The rise in confidence comes amid other signs that the spring
home-selling season is gaining momentum.
government reported new-home sales rose 6.8% in April, and construction spending
surged to its highest level since November 2008. Last month the National
Association of Realtors said its pending homes sales index, a forward-looking gauge of home
purchases, reached a nine-year high in April.
The Realtors group is forecasting existing home sales for the
full year will reach their highest level since 2006. And home prices are
picking up, a sign of rising demand.
New-home construction has remained choppy throughout the
recovery even when builder confidence has run high.
The current level of the index is considerably higher than what
economists would typically expect given the tepid pace of housing starts, said Joshua
Shapiro, chief U.S. economist for MFR Inc.
“There remains a big disconnect between what home builders are
saying and what they are actually doing,” Mr. Shapiro said.
If builders do step up construction to meet perceived demand,
that would help create new jobs, increase purchases of materials and boost an
economy that slowed in the early months of the year.
Monday’s report showed builder confidence rose three points in
the South to 60, three points in the Northeast to 44 and two points in the West
to 57. Confidence fell one point in the Midwest to 54.