Home Builder Confidence Up Despite Lack Of Home Buyer Activity

Posted by Patrick Barnard on June 16, 2014 No Comments
Categories : Residential Mortgage

Despite the fact that it has been a lackluster spring for home sales, overall, home builder confidence in the market for newly built, single-family homes rose four points on the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) in June.

As of mid-June, the index had reached a level of 49 – just one point shy of the threshold for what is considered good building conditions.

New home sales fell during January, February and March but rose about 6.4% in April, according to figures released by the U.S. Census Bureau. Overall, demand for new homes has outpaced demand for existing homes so far this year – due mainly to the fact that inventory is constrained. Figures for new home sales for May will be released next week.

‘After several months of little fluctuation, a four point up-tick in builder sentiment is a welcome sign and shows some renewed confidence in the industry,’ says Kevin Kelly, chairman for the NAHB, in a release. ‘However, builders are facing strong headwinds, including the limited availability of labor.’

‘Consumers are still hesitant, and are waiting for clear signals of full-fledged economic recovery before making a home purchase,’ adds David Crowe, chief economist for the NAHB. ‘Builders are reacting accordingly, and are moving cautiously in adding inventory.’

All three index components posted gains in June. Most notably, the component gauging current sales conditions increased six points to 54. The component gauging sales expectations in the next six months rose three points to 59 and the component measuring buyer traffic increased by three points to 36.

Looking at the three-month moving averages for regional HMI scores, the South and Northeast each edged up one point to 49 and 34, respectively, while the West held steady at 47. The Midwest fell a single point to 46.

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