NAHB Index: Home Builder Confidence Rises Four Points

In a CNBC program on Monday’s morning, Diana Olick discussed an increase in builder confidence on the monthly National Association of Home Builders (NAHB) Housing Market Index. After barely moving since February, homebuilder sentiment in the current month rose four points to 49 from 45 in the last month, Olick said.

Builder sentiment is only 1 point from key 50 level, which is considered the line between positive and negative territory. However, builders are citing strong headwinds, including weak consumer confidence, limited availability of labor and tight supplies, Olick said.

“Single family housing starts running about half of the historical rate given demand. Of the three index components, all posted gains, but the largest in current sales which jumped six points to 54, crossing into the positive range. Component gauging sales expectations in the next six months rose three points to 59 and buyer traffic increased three points to 36,” according to Olick.

“Regionally, three-month moving average, home builder sentiment strongest in the South and West weakest in the Northeast. Midwest the only region to see a drop in building confidence,” Olick added.

In a statement, National Association of Home Builders said that gains were posted by all three index components in June, with the component gauging current sales conditions raised six points to 54. On a regional basis, the South and Northeast each edged up one point to 49 and 34, respectively, while the West held steady at 47. The Midwest fell a single point to 46, the association said.

“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,” stated NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Del. “However, builders are facing strong headwinds, including the limited availability of labor.”

NAHB Chief Economist David Crowe said that “consumers are still hesitant, and are waiting for clear signals of full-fledged economic recovery before making a home purchase.”

Watch the report below: