U.S. homebuilders are showing increasing optimism about the strength of the housing market, as pent-up demand is expected to entire more buyers, according to a key report issued Wednesday.
Confidence from builders that focus on newly-built single-family homes rose four points in July to a reading of 53 on the National Association of Home Builders/Wells Fargo Housing Market Index. That reading was a six-month high and surpassed an important milestone, as any reading over 50 indicates that more builders view sales conditions as good than poor.
The NAHB report was issued a day before the Commerce Department will report U.S. home construction data for June. Economists polled by Bloomberg expect housing starts to climb about 2.5% in June from the prior month, rebounding from a greater-than-expected decline in May.
NAHB Chairman Kevin Kelly attributed the rosier attitude to an improving job market, saying that job growth goes “hand-in-hand with a rise in builder confidence.”
The housing sector suffered a mixed performance earlier this year, which many attributed to the severe winter weather. But housing data in May signaled an upswing in demand, important for the sector as it progresses into the key spring and summer home-buying season.
The NAHM/Wells Fargo report signaled broad gains in confidence metrics. The index gauging current sales conditions rose four points, while the index rose six points for future sales and three points for traffic of prospective buyers.