Builder Confidence Rebounds

Builder confidence bounced up a bit in July after hitting the floor in June, largely on confidence that single-family sales are a little better now and are expected to be better in six months, according to the NAHB/Wells Fargo housing Market Index (HMI). The index for July climbed from 13, the lowest it had been since September of last year, to 15. The number has been trending at all-time lows since the index began more than 20 years ago. However, this was the ninth time in the past 10 months in which the index stayed within the same three-point range. A score of more than 50 indicates that more builders surveyed view conditions as good rather than poor. “We view the upward movement in the July HMI as a correction from an exceptionally weak number in June that was at least partly attributable to negative economic news and the close of a disappointing spring selling season,” said NAHB chief economist David Crowe. “Basically the market continues to bounce along the bottom, with conditions in some locations beginning to improve.” Two out of three components in the index rebounded in July from June. Confidence related to present sales jumped from 13 to 15. Confidence about sales in the next six months climbed seven points from 15 to 22, the same level as April. And community traffic stayed steady at 12. Confidence improved in all regions except the Northeast where it fell two points to 15 from 17. The Midwest ticked up one point to 12 from 11. The South and the West regions each climbed three points to 17 and 14 respectively. “The improvement in builder confidence in July is a positive sign that the outlook perhaps isn’t as bleak as was feared in June,” NAHB chairman Bob Nielsen said in the survey results news release.

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