Home Builder Confidence Surges

Home builder confidence has risen to a seven-year high in June, according to the National Association of Home Builders. The index that measures builder sentiment towards the market has jumped to over 50 for the first time since April of 2006. A reading of over 50 on the NAHB/Wells Fargo index signals that more builders view market conditions as good rather than poor. This represents the largest one-month jump in the index since 2002. This was well above the industry estimate of 45 for the month.

Housing demand is still high, and inventories are still low, and coupled with steady hiring and low mortgage rates, analysts are predicting that this trend will continue. Applications for new home construction reached a five-year high in April, and new home sales have risen 29% in the past year.  ”Builders are experiencing some relief in the headwinds that are holding back a more robust recovery,” said David Crowe, the NAHB’s chief economist. New homes only represent a small fraction of the overall housing market, but they have a huge impact on the economy. Each new home built creates an average of 3 jobs and generates about $90,000 in tax revenue, according to the NAHB. For the full report visit USA Today.