U.S. Home Builder Confidence Rises to Highest Level in Nine Months

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The FINANCIAL — Confidence among U.S. home builders in June jumped to its highest level in nine months, a sign the housing market may be picking up steam after a sluggish winter, according to Nasdaq.

The National Association of Home Builders’ confidence index rose five points to a reading of 59 in June, the industry group said Monday. A reading above 50 means most builders generally hold a favorable view of the market for newly built, single-family homes.

Economists surveyed by The Wall Street Journal had expected a June confidence reading of 56.

Measures of current and future sales expectations “are at their highest levels since the last quarter of 2005, indicating a growing optimism among builders that housing will continue to strengthen in the months ahead,” NAHB Chief Economist David Crowe said in a statement.

“At the same time, builders remain sensitive to consumers’ ability to buy a new home,” Mr. Crowe said.

The report, based on a survey of builders, showed that the gauge of sales expectations for the next six months climbed six points to 69. The measure of buyer traffic rose five points to 44 and the component for current sales conditions jumped seven points to 65.

“The short-term relationship between the NAHB and the hard new home sales numbers is very volatile, but the underlying message is clear enough; we should expect a robust housing recovery during the summer and beyond,” Pantheon Macroeconomics Chief Economist Ian Shepherdson said in a note to clients.

The rise in confidence comes amid other signs that the spring home-selling season is gaining momentum.

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The government reported new-home sales rose 6.8% in April, and construction spending surged to its highest level since November 2008. Last month the National Association of Realtors said its pending homes sales index, a forward- looking gauge of home purchases, reached a nine-year high in April.

The Realtors group is forecasting existing home sales for the full year will reach their highest level since 2006. And home prices are picking up, a sign of rising demand.

New-home construction has remained choppy throughout the recovery even when builder confidence has run high.

The current level of the index is considerably higher than what economists would typically expect given the tepid pace of housing starts, said Joshua Shapiro, chief U.S. economist for MFR Inc.

“There remains a big disconnect between what home builders are saying and what they are actually doing,” Mr. Shapiro said.

If builders do step up construction to meet perceived demand, that would help create new jobs, increase purchases of materials and boost an economy that slowed in the early months of the year.

Monday’s report showed builder confidence rose three points in the South to 60, three points in the Northeast to 44 and two points in the West to 57. Confidence fell one point in the Midwest to 54.


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