NAHB/Wells Fargo: Builder confidence at highest point in five years

The NAHB/Wells Fargo Housing Market Index measuring builder confidence reached a five-year high point in June, hitting 29 for the first time since May 2007, according to data released today by NAHB. Month-to-month, the composite index score rose from a downwardly revised May 2012 score of 28.

The composite index score is based on a monthly survey that assesses builder perceptions in three areas: current single-family home sales; sales expectations for the next six months; and traffic of prospective buyers. The ratings for each category are then tabulated into the final composite score.

For June, builder confidence in current sales rose two points to 32, its best score since April 2007. The scores for future expectations and prospective buyers held steady from May’s tallies of 34 and 23 respectively.

Regional index scores were decidedly mixed. They went up in the Midwest (five points, to 31) and West (four points, to 33) but dropped in the Northeast (down two, to 29) and South (down two, to 26).

“This month’s modest uptick in builder confidence comes on the heels of a four-point gain in May and is reflective of the continued, gradual improvement we are seeing in many individual housing markets as more buyers decide to take advantage of today’s low prices and interest rates,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla.

“While the June HMI is in keeping with our forecast for gradually improving single-family home sales this year, recent economic reports that have shown some weakening in the pace of recovery likely factored into the marginal gain,” said NAHB Chief Economist David Crowe. “In addition, builders across the country continue to report that overly tight lending conditions and inaccurate appraisals are major obstacles to completing sales at this time.”

For more information, visit: http://www.nahb.org/news_details.aspx?newsID=15366.