The NAHB housing market index (HMI), a gauge for homebuilder confidence, climbed to 49 in June, from 45 in May.
This beat expectations for a rise to 47. But is far below the peak of 58 in August 2013.
A reading over 50 shows that more builders view conditions as good than poor.
“After several months of little fluctuation, a four-point uptick in builder sentiment is a welcome sign and shows some renewed confidence in the industry,” NAHB chairman Kevin Kelly, said in a press release. “However, builders are facing strong headwinds, including the limited availability of labour.”
Homebuilders have attributed the difficulty to find workers to the fact that many either left the labour force or joined another industry during the housing bust. Other homebuilders we spoke to earlier this year said many were now employed in oil and gas states.
“Consumers are still hesitant, and are waiting for clear signals of full-fledged economic recovery before making a home purchase,” NAHB chief economist David Crowe said in a press release. “Builders are reacting accordingly, and are moving cautiously in adding inventory.”
All three components of the HMI moved up in June (here they are verbatim):
- The component gauging current sales conditions increased six points to 54.
- The component gauging sales expectations in the next six months rose three points to 59.
- The component measuring buyer traffic increased by three to 36.
“With affordability still hugely impaired compared to last year, we don’t expect a sustained revival in demand anytime soon,” Ian Shepherdson at Pantheon Macroeconomics wrote in an email to clients. “And if mortgage rates rise over the summer, as we expect, housing will take another turn for the worse.”
This chart from Shepherdson shows the trajectory of homebuilder sentiment and new home sales:
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