Builder confidence in the market for newly-built single-family homes weakened slightly in June, however experts pointed out confidence is still at high levels as the housing market gradually recovers.
Builder confidence dropped two points to a level of 67, a decrease of the downwardly revised May reading of 69 on the National Association of Home Builders and Wells Fargo Housing Market Index.
“Builder confidence levels have remained consistently sound this year, reflecting the ongoing gradual recovery of the housing market,” NAHB Chairman Granger MacDonald said.
Derived from a monthly survey that NAHB has been conducting for 30 years, the index gauges 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 most homebuilders view conditions as good rather than poor.
All three HMI components saw decreases in June but remained at healthy levels, according to NAHB. The component measuring current sales conditions dropped two points to 73 while the index measuring sales expectations over the next six months fell two points to 76 in May. The component measuring buyer traffic fell two points to 49.
“As the housing market strengthens and more buyers enter the market, builders continue to express their frustration over an ongoing shortage of skilled labor and buildable lots that is impeding stronger growth in the single-family sector,” NAHB Chief Economist Robert Dietz said.