Confidence among U.S. homebuilders climbed in June to a five-year high, indicating a brighter outlook for residential construction. Bloomberg.com reports the National Association of Home Builders/Wells Fargo confidence index rose to 29, the highest since May 2007, from a revised 28 in May that was lower than first estimated. The gauge exceeded the median estimate of 28 in a Bloomberg News survey. Readings below 50 mean more respondents said conditions were poor.
Cheaper properties and record-low mortgage rates are propelling demand and encouraging builders to take on new projects. At the same time, further momentum for housing construction may take time to unfold as access to credit is limited and ongoing foreclosures add to supply.
The report showed a gain in the measure of current single-family home purchases. A gauge of sales in the next six months was stable as was the index of buyer traffic.
“While the June HMI is in keeping with our forecast for gradually improving single-family home sales this year, recent economic reports that have shown some weakening in the pace of recovery likely factored into the marginal gain,” David Crowe, the association’s chief economist, said in a statement. “In addition, builders across the country continue to report that overly tight lending conditions and inaccurate appraisals are major obstacles to completing sales at this time.”
Lower interest rates have helped drive home refinancing and purchases. The Mortgage Bankers Association’s latest refinancing index climbed to a three-year high, while the Washington-based group’s purchase gauge for the week ended June 8 rose to the highest this year.
The builders group’s index of current single-family home sales increased to 32 this month, the highest since April 2007, from 30 in May. A measure of sales expectations for the next six months held at 34, and the gauge of buyer traffic stayed at 23. Read More.