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Builder Confidence Regains its Footing in June

by Peter Thomas Ricci

After a few months of fluctuations, it appears builder confidence has regained its, well, confidence!

Builder confidence for the single-family new construction home marketplace rose four points in June to reach a level of 49, according to the latest Housing Market Index from the National Association of Home Builders (NAHB).

The index is now just one point shy of the magical 50, which is the point where more builders see conditions as good than bad.

Builder Confidence on the Mend?

Kevin Kelly, the NAHB’s current chairman, said that June’s Housing Market Index is a good sign for builders, though challenges remain.

“After several months of little fluctuation, a four-point uptick in builder sentiment is a welcome sign and shows some renewed confidence in the industry,” Kelly said. “However, builders are facing strong headwinds, including the limited availability of labor.”

The Housing Market Index breaks down into several components that measure different aspects of the homebuilding market, and the NAHB measured the following changes:

  • The component gauging current sales conditions rose six points to 54, blowing past the 50 benchmark.
  • Similarly encouraging was the component measuring sales expectations for the next six months, which rose three points to 59.
  • And though the buyer traffic component remains relatively low at 36, it did rise three points.
  • Regionally, builder confidence rose one points in the South and Northeast, reaching 49 and 34, respectively; in the West, confidence held steady at 47, and in the Midwest it dropped a point to 46.

Indicative of Larger Trends at Work

Earlier this week, we reported on the latest construction data from the Census Bureau, and how although housing starts and permits remain inconsistent thus far in 2014, they’ve shown obvious progress over the long term. Not only are housing starts up 10 percent year-over-year over a three-month moving average (with multifamily up 18 percent) but also, housing starts have been at a rate of more than one million in four of the last seven months, which hasn’t happened since the recession began way back in 2008.

So clearly, builders are onto something with this confidence!

 

 

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