WASHINGTON — A gauge of confidence among home builders jumped in June, hitting the highest level since 2006, on more optimism about future and current sales, according to data released Monday.
The National Association of Home Builders/Wells Fargo housing-market index rose to 52 in June — the first time the index has reached above a key reading of 50 since 2006 — from 44 in May. Readings above 50 signal that builders, generally, are optimistic about sales trends.
“Builders are seeing better market conditions as demand for new homes increases,” said Rick Judson, NAHB’s chairman. “With the low inventory of existing homes, an increasing number of buyers are gravitating toward new homes.”
The 8-point jump in June is the index’s largest increase since 2002.
Economists polled by MarketWatch had expected the overall builder-sentiment index to rise to 45 in June. The sentiment level among builders is up 79 percent from a year ago, supported by low interest rates and home inventories. While recent weeks have seen interest rates risingg, they still remain relatively low.
Given rising rates, the spike in builder sentiment may not be “unambiguously good news,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
“It is possible that the survey just reflects a temporary surge of buyer interest triggered by the spike in mortgage rates. Nothing gets people moving faster than fear rates will rise further,” Shepherdson said.