Builder confidence was steady in June says NAHB

Confidence among builders in the market for new single-family homes held steady in June.

The National Association of Home Builders / Wells Fargo Housing Market Index (HMI) gained 1 point to 65, holding in the low-to-mid-60s for the sixth consecutive month.

“Builders report solid demand for single-family homes. However, they continue to grapple with labor shortages, a dearth of buildable lots and rising construction costs that are making it increasingly challenging to build homes at affordable price points relative to buyer incomes,” said NAHB Chairman Greg Ugalde.

The components of the index which track sentiment in current sales, expectations for the next 6 months, and buyer traffic, all gained.

Regionally, the 3-month moving averages for the South moved one point higher to 68 and the West was also up one point to 72, the Northeast remained unchanged at 60 while the Midwest fell a single point to 56.

Affordability concerns

NAHB Chief Economist Robert Dietz says that builder sentiment gained despite concerns about affordability.

While builders are doing their best in this regard, trying to rein in costs, home prices are still rising faster than incomes, challenging would-be homebuyers.

“The current low mortgage interest rate environment should be getting more buyers off the sidelines, but they remain hesitant due to affordability concerns,” he said. “Still, attractive rates should help spur new home purchases in large metro suburban markets, where approximately one-third of new construction takes place.”