Big Milestone in Homebuilder Confidence

June 18, 2013

Homebuilder confidence is at its highest level in seven years, reaching a big milestone in June, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The index, which measures homebuilder sentiment over the new-home market, rose eight points in June to 52 — any reading above 50 indicates that more builders view sales conditions as good rather than poor. 

"This is the first time the HMI has been above 50 since April 2006, and surpassing this important benchmark reflects the fact that builders are seeing better market conditions as demand for new homes increases," says NAHB Chairman Rick Judson. "With the low inventory of existing homes, an increasing number of buyers are gravitating toward new homes."  

The index measures builders’ perceptions of single-family home sales, buyer traffic, and sales expectations for the next six months. The index measuring just builders’ expectations for future sales surged nine points in June to 61, reaching its highest level since March 2006. 

"Builders are experiencing some relief in the headwinds that are holding back a more robust recovery," says NAHB Chief Economist David Crowe.

NAHB is predicting a 29 percent increase in housing starts this year, which would put housing starts at the 1 million mark for the first time since 2007. 

Source: National Association of Home Builders

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