An index of builder confidence in the market for single-family homes climbed four points to 53 this month, the National Association of Home Builders said Wednesday. It was the highest reading since January. A reading of 50 or more means builders generally view conditions as favorable.
Economists surveyed by The Wall Street Journal had expected a July reading of 50.
The latest boost in optimism is being driven by new buyers entering the market after previously putting off the search process, or so-called pent-up demand, said Kevin Kelly, a Delaware builder who chairs the NAHB.
David Crowe, the trade group’s chief economist, added in a statement, “As employment increases and those with jobs feel more secure about their own economic situation, they are more likely to feel comfortable about buying a home.”
The group’s latest survey showed builders were especially optimistic about future sales conditions. A measure of their outlook of sales of single-family homes in the next six months rose six points to 64, the highest level since last September.
Builders are hoping that a recent pickup in sales, climbing prices and tight inventory levels could translate into stronger business in coming months.
To be sure, the housing market still remains subdued, having cooled about a year ago.
The overall housing recovery posted robust growth in 2012 and the first half of 2013, but then lost momentum as interest rates rose and prices became out of reach for many prospective buyers.
Other recent signs point to the housing market regaining its footing recently.
Sales of existing homes – the broadest measure of the market’s health-rose nearly 5% in May to the highest level since October, according to the National Association of Realtors.
Pending home sales – which measure those under contract but not yet closed-also jumped in May, the group said.