Builder Confidence Soars. Sharpest Rise Since 2002

Lowrninventories and increasing traffic have unleashed the confidence ofrnnew new home builders the National Association of Home Buildersrn(NAHB) said today. Its Housing Market Index (HMI), issued inrnconjunction with Wells Fargo Bank, jumped eight points in June to arnreading of 52. A score of 50 is significant to the Index as itrnindicates more builders view sales conditions as good than view it asrnpoor. The eight-point jump in the index was the biggest one-monthrngain since August and September of 2002, when the HMI recorded arnsimilar increase of eight points.</p

NAHBrnChairman Rick Judson said “This is the first time the HMI hasrnbeen above 50 since April 2006, and surpassing this importantrnbenchmark reflects the fact that builders are seeing better marketrnconditions as demand for new homes increases. With the low inventoryrnof existing homes, an increasing number of buyers are gravitatingrntoward new homes.” </p

ThernHMI is derived from a monthly survey of its builder members that NAHBrnhas conducted for 25 years. Builders are asked to gauge the currentrnmarket and the market as they expect it will look for the next sixrnmonths as “good,” “fair,” or “poor.” They are also asked to rate current buyer traffic as “high to veryrnhigh,” “average” or “low to very low.” Responses are usedrnto construct three measures of confidence and the composite index. </p

Thernindex measuring current sales conditions also increased eight pointsrnto 56 and the index gauging future expectations was up even more -rnnine points to 61 – its highest point since March 2006. The index forrnbuyer traffic, while still lagging at 40 was up seven points fromrnMay.</p

“Buildersrnare experiencing some relief in the headwinds that are holding back arnmore robust recovery,” said NAHB Chief Economist David Crowe.rn”Today’s report is consistent with our forecast for a 29 percentrnincrease in total housing starts this year, which would mark thernfirst time since 2007 that starts have topped the 1 million mark.”</p

ThernHMI three-month moving average was up in three of the four regions,rnwith the Northeast and Midwest posting a one-point and three-pointrngain to 37 and 47, respectively. The South registered a four pointrngain to 46 while the West fell one point to 48.

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