Expecting an increase in buyers, home builders are more optimistic this month than they’ve been all year, according to a builder confidence survey released June 15.
The National Association of Home Builders/Wells Fargo Housing Market Index, which performs an expectation survey each month rating builders’ perceptions for business as “good,” “fair” or “poor,” announced a one-point rise, compared to May, to 71 in the new home index. The June reading is the highest since a similar score in December. Also increased by one point from May were the current sales index and the index gauging traffic of prospective buyers. The June survey registered a two-point jump in the index gauging expectation for sales in the next six months.
The large number of home buyers is due to low mortgage rates combined with strong household income and job growth, according to NAHB chief economist David Seiders. “Combined with the very solid appreciation rates we’ve seen, and the widespread expectation that mortgage rates will begin creeping up soon, that’s a powerful incentive to make a move,” he wrote in the report, adding that the average rate on a 30-year mortgage declined 21 basis points recently, ending at 5.56 percent as of June 9, so even more home buyers than anticipated could begin flooding the market.
Although some economists think low mortgage rates will affect the stock market at some point, no official reports were found doubting home builders’ success for the rest of the summer.
The United States Census Bureau reported a 4.9 percent increase last month in single-family home construction, which rose to a rate of nearly two million units.
By region, residential construction was up 18.7 percent in the Midwest to an annual rate of 185,000 units followed by a 12.3 percent gain in the West. Construction also rose in the Northeast, which recorded a 5.1 percent increase to an annual rate of 185,000 units.
The only region of the country that suffered a decline in activity last month was the South, where housing starts fell 12.1 percent to an annual rate of 903,000 units.