The National Association of Home Builders (NAHB)/Wells
Fargo Housing Market Index narrowed the gap with positive territory this month
with a jump of four points. After
lagging in the low to mid-40s for months, the index rose to 49 in June,
one point shy of what is considered the threshold for perceptions of a good
home building environment.
"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," said NAHB Chairman Kevin Kelly.
"However, builders are facing strong headwinds, including the limited availability
NAHB and Wells Fargo derive their HMI from a survey of new home builders now in
its 30th year. The survey
attempts to gauge builder perceptions of the market for new single family homes
now and in the near future. Builders are asked to quantify their expectations
for current sales and sales over the next six months as "good," "fair" or
"poor." The survey also asks builders to rate traffic of prospective buyers as
"high to very high," "average" or "low to very low." Scores for each component
are then used to calculate a seasonally adjusted index where any number over 50
indicates that more builders view conditions as good than poor.
There was positive news from all
three underlying scores as well. Current
sales conditions gained six points to 54 and the component measuring future
prospects rose three to 59. Buyer
traffic perceptions rose three points but still lags badly at 39.
"Consumers are still hesitant, and are waiting for clear signals of
full-fledged economic recovery before making a home purchase," said NAHB Chief
Economist David Crowe. "Builders are reacting accordingly, and are moving
cautiously in adding inventory."
The main HMI figure came in above expectations. Reuters said its survey of analysts had a consensus
of 47, two points below the actual number.
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.