Surging builder confidence hints at housing market recovery

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Builder confidence surged in June, climbing 21 points to 58, which puts the measure back in positive territory, according to the National Association of Home Builders and Wells Fargo’s monthly Housing Market Index (HMI).

“As the nation reopens, housing is well-positioned to lead the economy forward,” NAHB Chairman Dean Mon said in a statement on Tuesday.

“Inventory is tight, mortgage applications are increasing, interest rates are low and confidence is rising. And buyer traffic more than doubled in one month even as builders report growing online and phone inquiries stemming from the outbreak.”

HMI is a weighted average of separate indices for three single-family data points. It asks respondents to rate the market conditions for the sale of new homes at present and in the next six months, as well as the traffic of prospective buyers of new homes. It falls in a range of 0-100 with any score above 50 indicating a positive market.

In the wake of the COVID-19-fueled housing market slowdown, the HMI is recovering across all three tracked indices. The index gauging current conditions increased 21 points to 63. The index measuring sales expectations in the next six months climbed 22 points to 68 and the index measuring traffic of prospective buyers was up 22 points to 43.

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