Homebuilder confidence in the U.S. has seen a modest improvement in the month of June, according to a report released by the National Association of Home Builders on Monday, although the increase came after a downward revision to the reading for May.
The report showed that the NAHB/Wells Fargo Housing Market Index crept up to 29 in June from a downwardly revised 28 in May. Economists had expected the index to come in unchanged compared to the 29 originally reported for the previous month.
With the modest increase compared to the previous month's revised reading, the index rose to its highest level since coming in at 30 in May of 2007.
NAHB Chief Economist David Crowe said, "While the June HMI is in keeping with our forecast for gradually improving single-family home sales this year, recent economic reports that have shown some weakening in the pace of recovery likely factored into the marginal gain."
"In addition, builders across the country continue to report that overly tight lending conditions and inaccurate appraisals are major obstacles to completing sales at this time," he added.
The modest increase by the headline index was largely due to an improvement by the component measuring current sales conditions, which rose to 32 in June from 30 in May.
Meanwhile, the components measuring sales expectations in the next six months and traffic of prospective buyers both came in unchanged at 34 and 23, respectively.
The report also showed that the index for Midwest rose to 31 in June from 26 in May, while the index for the West climbed to 33 from 29.
On the other hand, the indexes for the Northeast and the South both fell by two points, dropping to 29 and 26, respectively.
Tuesday morning, the Commerce Department is scheduled to release a separate report on new residential construction in the month of May.
Economists expect housing starts to climb to an annual rate of 720,000 in May from 717,000 in April, while building permits are expected to rise to an annual rate of 736,000 from 715,000.
by RTT Staff Writer
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