June Sees A Positive Housing Market In Builder Confidence


According to the latest NAHB/Wells Fargo Housing Market Index (HMI), builder confidence in the housing market for newly-built single-family homes rose 21 points to 58 this June. This is a great reading as anything above 50 shows a positive market.

“As the nation reopens, housing is well-positioned to lead the economy forward,” said NAHB Chairman Dean Mon. “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.”

“Housing clearly shows signs of momentum as challenges and opportunities exist in the single-family market. Builders report increasing demand for families seeking single-family homes in inner and outer suburbs that feature lower density neighborhoods,” said NAHB Chief Economist Robert Dietz.

In fact, surprisingly even while the pandemic was occurring, the total single-family permits issued year-to-date (YTD) nationwide reached 283,344 which is an 8.5% increase over this time last year. From April 2019 to April 2020 the majority of the states experienced growth in single-family permits. South Dakota was the highest with a rise of 799 from 588. The 10 states with the highest number of permits accounted for 63.5% of the total of single-family permits issued across the country.

The National Home Builders Association has been conducting the NAHB/Wells Fargo HMI monthly survey 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 ‘good,’ ‘fair’ or ‘poor’.” Builders are also asked to rate potential home buyer traffic as “high to very high,” “average” or “low to very low.” The scores are then combined to create the seasonally adjusted index. The seasonally adjusted index indicates if builders see the conditions as good or poor. As mentioned before, if the index is over 50, builders’ perception of the market is positive.

As for the current HMI report, all things are positive for the housing market. The HMI index for current sales conditions jumped 21 points to 63, the survey that measures sales expectations in the next six months jumped 22 points to a total 68 and potential home buyer traffic spiked 22 points to 43.

This is a great sign of our economy’s recovery. The housing market “stands poised to lead a post-pandemic economic recovery.”

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