Homebuilder confidence in the U.S. has unexpectedly improved in the month of July, according to a report released by the National Association of Home Builders on Tuesday, with the reading on homebuilder confidence reaching its highest level in well over seven years.
The report showed that the NAHB/Wells Fargo Housing Market Index jumped to 57 in July from a downwardly revised 51 in June.
Economists had expected the index to come in unchanged compared to the 52 originally reported for the previous month.
With the unexpected increase, the housing market index rose to its highest level since a matching reading in January of 2006.
NAHB Chief Economist David Crowe said, "Builders are seeing more motivated buyers coming through their doors as the inventory of existing homes for sale continues to tighten."
"Meanwhile, as the infrastructure that supplies home building returns, some previously skyrocketing building material costs have begun to soften," he added.
The unexpected increase by the housing market index reflected increases by all three of the components that make up the headline index.
The component gauging current sales conditions rose to 60 in July from 55 in June, reaching its highest level since early 2006.
Additionally, the component gauging sales expectations in the next six months jumped to 67 in July from 60 in June, while the component gauging traffic of prospective buyers climbed to 45 from 40. Both readings were at their highest level since late 2005.
The report also showed increases by the housing market indexes for all four regions of the country. The index for the West showed a substantial increase, surging up by to 62 in July from 50 in June.
On Wednesday, the Commerce Department is scheduled to release its report on new residential construction in the month of June. Economists expect housing starts to climb to an annual rate of 951,000.
by RTT Staff Writer
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