Builder confidence took a marginal step down in July, according to the National Association of Home Builders' Wells Fargo Housing Market Index (HMI), released Monday morning. July's score of 59 is a minimal decline from June's reading of 60, and marks a slow yet steady growth in the housing market. A score over 50 indicates a positive outlook for the home building industry.
“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, in a statement. “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.”
All three components of the index dropped in July, with predicted single family sales for the next six months reporting the largest decline from 69 to 66. Builders also gauged a one point decline for present sales conditions and traffic of prospective buyers, to 63 and 45, respectively.
Builders in three out of four regions have a positive outlook (50 points and higher) for the housing market. Builders in the West are most confident, posting a reading of 70 in July (the highest of any region), one point higher than a month earlier. The Midwest and Northeast saw their regional housing market index rise from 55 to 56, and from 39 to 42, respectively. Builders in the South reported a score of 60 in July, cutting four points from June, but still above the 50-point threshold.
In the latest job report released by the Bureau of Labor Statistics, construction employment ended the job-shedding trend spotted for the past a few months and held firm in June, a sign many economists interpret as good potential for future progress.
“The economic fundamentals are in place for continued slow, steady growth in the housing market,” said NAHB Chief Economist Robert Dietz. “Job creation is solid, mortgage rates are at historic lows and household formations are rising. These factors should help to bring more buyers into the market as the year progresses.”
Read BUILDER's coverage of the June HMI readings here >>