Builder Confidence Hits New High

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June 23, 2016
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Builder Confidence Hits New High

Confidence among U.S. homebuilders climbed to a five-month high in June, signaling the residential real-estate market may have some scope for a pickup, according to data Thursday from the National Association of Home Builders/Wells Fargo data.

Key Points

  • Builder sentiment gauge rose to 60 from 58
  • Median forecast in a Bloomberg survey was 59; Readings greater than 50 indicate more respondents reported good market conditions
  • Gauge of prospective buyer traffic advanced to 47, the highest since November, from 44
  • Measure of six-month sales outlook increased to 70, the strongest since October, from 65, while index of current sales rose by 1 point to 64

Big Picture
Cheap borrowing costs and and steady improvement in the labor market have bolstered Americans’ abilities to buy homes, giving builders reason to be more optimistic. A pickup in wage growth will be needed to give additional households the confidence to buy and, in the process, lend a hand to economic growth.

Economist Takeaways

  • “Rising home sales, an improving economy and the fact that the HMI gauge measuring future sales expectations is running at an eight-month high are all positive factors indicating that the housing market should continue to move forward in the second half of 2016,” NAHB Chief Economist Robert Dietz said in a statement.

The Details

  • Confidence increased in three of the four U.S. regions, with builders in the South the most upbeat since October
  • Builder sentiment in the West reached a five-month high