Homebuilder confidence hits highest point in five years

Homebuilder confidence hit its highest level in five years in June, a modest increase that likely reflects a spate of recent economic reports showing a slower pace of the overall recovery.  

The National Association of Home Builders reported Monday that sentiment in the market for newly built, single-family homes ticked up one point in June from a slightly revised level in the previous month to 29, the best showing since May 2007, according to the group's Wells Fargo Housing Market Index. 

"This month's modest uptick in builder confidence comes on the heels of a four-point gain in May and is reflective of the continued, gradual improvement we are seeing in many individual housing markets as more buyers decide to take advantage of today's low prices and interest rates," said Barry Rutenberg, chairman of the NAHB and a homebuilder from Gainesville, Fla.

In June, the index measuring current sales conditions rose two points to 32, the highest level since April of 2007. 

Meanwhile, the components measuring sales expectations in the next six months and traffic of prospective buyers held unchanged at 34 and 23, respectively.

"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," said NAHB Chief Economist David Crowe. 

"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."

Regionally, the index results were mixed in June, with two areas of the country posting gains and two posting declines. The Midwest registered a five-point gain to 31 while the West was up 4 points to 33, while the Northeast and South each posted two-point declines, to 29 and 26, respectively.