NAHB Housing Index Surges to 52 in June

Builders' confidence in the market for new single-family homes soared as the National Association of Home Builders' housing market index — a monthly gauge of builder sentiment — rose to 52 in June from 44 in May.

Thomson Reuters' poll of economists predicted the index would rise to 45.

"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," according to NAHB Chairman Rick Judson. "With the low inventory of existing homes, an increasing number of buyers are gravitating toward new homes."

The eight point jump was the largest since a similar rise posted from August to September 2002.

"Builders are experiencing some relief in the headwinds that are holding back a more robust recovery," said NAHB Chief Economist David Crowe. "Today's report is consistent with our forecast for a 29 percent increase in total housing starts this year, which would mark the first time since 2007 that starts have topped the 1 million mark."

Derived from a monthly survey that NAHB has been conducting for 25 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as either "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as either "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 sales conditions as good than poor.

The current single-family home sales index rose to 56 from 48, the sales expectations index for the next six months jumped to 61 from 52, the highest its been since March 2006, and the traffic of prospective buyers index climbed to 40 from 33.

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