Two months after things looked bleak, builder confidence surged in June as the nation takes additional steps to reopen after the economic shutdowns in reaction to the COVID-19 pandemic.
The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released Tuesday found builder confidence in the market for newly built single-family homes increased 21 points to 58. Anything about 50 reflects a positive view of the market.
“Housing clearly shows signs of momentum as challenges and opportunities exist in the single-family market,” NAHB Chief Economist Robert Dietz said. “Builders report increasing demand for families seeking single-family homes in inner and outer suburbs that feature lower density neighborhoods. At the same time, elevated unemployment and the risk of new, local virus outbreaks remain a risk to the housing market.”
The HMI dropped 42 points to 30 in April, the largest single-month decline in the history of the index. The HMI sat at 76 at the end of 2019.
For June, the HMI index gauging current sales conditions climbed 21 points to 63, the component measuring sales expectations in the next six months increased 22 points to 68 and the measure charting traffic of prospective buyers increased 22 points to 43.
Looking at the monthly average regional HMI scores, the Northeast increased 31 points to 48, the South jumped 20 points to 62, the Midwest increased 19 points to 51 and the West jumped 22 points to 66.
“As the nation reopens, housing is well-positioned to lead the economy forward,” said NAHB Chairman Dean Mon, a home builder and developer from Shrewsbury, N.J. “Inventory is tight, mortgage applications are increasing, interest rates are low and confidence is rising. And buyer traffic more than doubled in one month even as builders report growing online and phone inquiries stemming from the outbreak.”