Homebuilder confidence rises

WASHINGTON — A gauge of confidence among homebuilders jumped in June, hitting the highest level since 2006, on more optimism about future and current sales, according to data released Monday.

The National Association of Home Builders/Wells Fargo housing-market index rose to 52 in June — the first time the index has reached above a key reading of 50 since 2006 — from 44 in May. Readings above 50 signal that builders, generally, are optimistic about sales trends.

"Builders are seeing better market conditions as demand for new homes increases," said Rick Judson, NAHB's chairman.

The eight-point jump in June is the index's largest increase since 2002.

Economists polled by MarketWatch had expected the overall builder-sentiment index to rise to 45 in June. The sentiment level among builders is up 79 percent from a year ago, supported by low interest rates and home inventories. While recent weeks have seen interest rates risingg, they still remain relatively low.

Given rising rates, the spike in builder sentiment may not be "unambiguously good news," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

"It is possible that the survey just reflects a temporary surge of buyer interest triggered by the spike in mortgage rates. Nothing gets people moving faster than fear rates will rise further," Shepherdson said.

According to NAHB, sub-gauges looking at builders' views on current and coming sales hit the highest levels since 2006. A gauge of builders' views on present sales of single-family homes rose to 56 in June from 48 in May. A gauge of their views on sales in the next six months rose to 61 from 52. A barometer of their views on prospective-buyer traffic increased to 40 from 33.

Confidence readings were at least 50 in three of four regions in June. In the Midwest, the builder-confidence reading rose to 57 in June from 44 in May. In the South, the confidence gauge rose to 53 from 44. In the West, the gauge rose to 50 from 41. In the Northeast, the gauge declined to 39 from 40.

Home building is an important economic driver, and economists expect residential investment to continue to contribute to growth this year. On Tuesday, the government will report on housing starts for May, and economists expect a seasonally adjusted annual rate of 940,000, compared with a rate of 853,000 for April.

Despite construction gains, builder confidence levels are far higher than those typically associated with the current level of single-family-home starts. Indeed, with lean inventories, builders have been able to raise prices.


)2013 MarketWatch

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AP-WF-06-17-13 1932GMT

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