Homebuilder confidence for newly built, single-family homes in July fell one point, but remains strong, according to the Housing Market Index released today by the National Association of Home Builders and Wells Fargo.
The builder’s confidence fell one point from June’s 60 to 59 in July, according to the HMI report.
“For the past six months, builder confidence has remained in a relatively narrow positive range that is consistent with the ongoing gradual housing recovery that is underway,” said NAHB Chairman Ed Brady, a homebuilder and developer from Bloomington, Illinois.
“However, we are still hearing reports from our members of scattered softness in some markets, due largely to regulatory constraints and shortages of lots and labor,” Brady said.
Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo HMI categorizes builder perceptions of current single-family home sales and sales expectations for the next six months as good, fair or poor.
The survey also asks builders to rate traffic of prospective buyers as high to very high, average or low to very low. Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
All three parts of the HMI decreased slightly in July. Those measuring current sales expectations and buyer traffic each fell one point to 63 and 45 respectively. The index measuring sales expectations in the next six months fell by three points to 66.
The three-month moving averages for regional HMI scores stayed the same for the most part. The Northeast, Midwest and South stayed at 39, 57 and 61, respectively. The West increased by one point to 69.
Although payroll employment shot up in June, the main areas affected by the increase were in leisure and hospitality, health care and social assistance, and financial activities, according to the jobs report. Employment also increased in information, mostly reflecting the return of workers from the Verizon strike.
“The economic fundamentals are in place for continued slow, steady growth in the housing market,” NAHB Chief Economist Robert Dietz said.
“Job creation is solid, mortgage rates are at historic lows and household formations are rising,” Dietz said. “These factors should help to bring more buyers into the market as the year progresses.”
In fact, mortgage rates barely moved on Thursday, according to Freddie Mac’s Primary Mortgage Market Survey released Thursday.
“This week, the 30-year fixed rate barely budged, rising just one basis point to 3.42%,” Freddie Mac Chief Economist Sean Becketti said. “This pattern suggests that mortgage rates are likely to remain low throughout the summer.”