Builder Confidence Highest Since January

The National Association of Home Builders (NAHB)/WellsrnFargo Housing Market Index narrowed the gap with positive territory this monthrnwith a jump of four points.  Afterrnlagging in the low to mid-40s for months, the index rose to 49 in June,rnone point shy of what is considered the threshold for perceptions of a goodrnhome building environment. </p

“After several months of littlernfluctuation, a four-point uptick in builder sentiment is a welcome sign andrnshows some renewed confidence in the industry,” said NAHB Chairman Kevin Kelly.rn”However, builders are facing strong headwinds, including the limited availabilityrnof labor.”  <br /<br /NAHB and Wells Fargo derive their HMI from a survey of new home builders now inrnits 30^th year.  The surveyrnattempts to gauge builder perceptions of the market for new single family homesrnnow and in the near future. Builders are asked to quantify their expectationsrnfor current sales and sales over the next six months as “good,” “fair” orrn”poor.” The survey also asks builders to rate traffic of prospective buyers asrn”high to very high,” “average” or “low to very low.” Scores for each componentrnare then used to calculate a seasonally adjusted index where any number over 50rnindicates that more builders view conditions as good than poor.</p

There was positive news from allrnthree underlying scores as well.  Currentrnsales conditions gained six points to 54 and the component measuring futurernprospects rose three to 59.  Buyerrntraffic perceptions rose three points but still lags badly at 39. <br /<br /"Consumers are still hesitant, and are waiting for clear signals ofrnfull-fledged economic recovery before making a home purchase,” said NAHB ChiefrnEconomist David Crowe. “Builders are reacting accordingly, and are movingrncautiously in adding inventory.” </p

The main HMI figure came in above expectations.  Reuters said its survey of analysts had a consensusrnof 47, two points below the actual number. </p<pLooking at the three-month moving averages forrnregional HMI scores, the South and Northeast each edged up one point to 49 andrn34, respectively, while the West held steady at 47. The Midwest fell a singlernpoint to 46.

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