NAHB’s builder confidence index plummeted for two months but surged 21 points in June. Any score above 50 is considered positive territory; this month it rose to 58.

WASHINGTON – Builder confidence in the market for newly-built single-family homes jumped 21 points to 58 in June, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

NAHB calls it “a sign that housing stands poised to lead a post-pandemic economic recovery.” Since any reading above 50 indicates a positive market, the index has returned to positive territory.

“As the nation reopens, housing is well-positioned to lead the economy forward,” says NAHB Chairman Dean Mon, a home builder and developer from Shrewsbury, N.J. “Inventory is tight, mortgage applications are increasing, interest rates are low and confidence is rising. And buyer traffic more than doubled in one month even as builders report growing online and phone inquiries stemming from the outbreak.”

“Housing clearly shows signs of momentum as challenges and opportunities exist in the single-family market,” says NAHB Chief Economist Robert Dietz. “Builders report increasing demand for families seeking single-family homes in inner and outer suburbs that feature lower density neighborhoods. At the same time, elevated unemployment and the risk of new, local virus outbreaks remain a risk to the housing market.”

All the HMI indices posted gains in June. The HMI index gauging current sales conditions jumped 21 points to 63, the component measuring sales expectations in the next six months rose 22 points to 68, and the measure charting traffic of prospective buyers rose 22 points to 43.

Looking at the monthly average regional HMI scores, the Northeast rose 31 points to 48, the South jumped 20 points to 62, the Midwest posted a 19-point gain to 51 and the West rose 22 points to 66.

The NAHB/Wells Fargo Housing Market 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 that more builders view conditions as good than poor.

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