In a cautiously hopeful sign for the housing market, a report issued Monday finds builder confidence for newly built single-family homes at a five-year high.
The National Association of Home Builders/Wells Fargo Housing Market Index gained one point in June to 25 from a slightly revised level in the previous month. The index is derived from a monthly survey that the NAHB has been conducting for 25 years in which builders are polled on their perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair,” or “poor.” Builders also rate traffic of proepctive buyers as “high to very high,” “average” or “low to very low.”
In June, the JMI component measuring current sales conditions rose two points to 32, its highest level since April of 2007. Sales expectations in the next six months and traffic of prospective buyers held unchanged at 34 and 23, respectively.
“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,” Barry Rutenberg, chairman of the National Association of Home Builders, said in a statement.
Regionally, the HMO showed mixed results. The Midest posted a five-point gain to 31 and the West registered a four-point gain to 33,. But the Northeast and South each registered two-point declines at 34 and 23, respectively,
Despite an increase in builder optimism, albeit slight, the housing market’s foundation remains shaky. Any index reading below 50 indicates negative sentiment. The index has not reached a level of 50 or above since April 2006.
New homes represent less than one-quarter (20 percent) of the housing sales market, but each home, according to the NAHB creates an average of three jobs for a year and generates about $90,000 in tax revenue.
A home is the most common investment of affluent households, but Millionaire attitudes seem to have soured as the housing market struggles to recover. More than one-fourth of Millionaires report substantial losses to their home values over the past five years, according to a recent Millionaire Corner survey. More than 40 percent describe their home value as “lower” since the housing market collapse. Only about 14 percent said their home value is unchanged.
Little wonder that less than 13 percent of Millionaires would rank purchasing a home as the best financial decision they’ve ever made in a survey we conducted in May, or that in a first quarter wealth level study, one-fourth of Millionaires said that their home is not a stable financial asset.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.