Builders' confidence in the market for new single-family homes grew as the National Association of Home Builders' housing market index — a monthly gauge of builder sentiment — climbed to 53 in July from 49 in June.
Thomson Reuters' poll of economists predicted the index would be 50.
"This is the first time that builder confidence has been above 50 since January and an important sign that it is strengthening as pent-up demand brings more buyers into the marketplace," NAHB Chairman Kevin Kelly said.
"An improving job market goes hand-in-hand with a rise in builder confidence," according to NAHB Chief Economist David Crowe. "As employment increases and those with jobs feel more secure about their own economic situation, they are more likely to feel comfortable about buying a home."
Derived from a monthly survey that NAHB has been conducting for 30 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 surged to 57 from 53, the sales expectations index for the next six months climbed to 64 from 58; and the traffic of prospective buyers index rose to 39 from 36.
