Builder sentiment jumped 21 points in June to 58, the largest monthly increase ever in the National Association of Home Builders/Wells Fargo Housing Market Index, according to cnbc.com. In April, it plunged a record 42 points to 30. Any reading above 50 indicates a positive market.
The boost is attributed to a faster-than-expected turnaround in homebuyer demand after a sharp decline at the start of the COVID-19 pandemic.
“As the nation reopens, housing is well-positioned to lead the economy forward,” said NAHB Chairman Dean Mon, a homebuilder and developer from Shrewsbury, N.J. “Inventory is tight, mortgage applications are increasing, interest rates are low and confidence is rising.”
Of the homebuilder index’s three components, current sales conditions jumped 21 points to 63; sales expectations in the next six months rose 22 points to 68; and buyer traffic more than doubled from May to June, from 22 to 43. The buyer traffic component is surprising because builders reported more online inquiries and virtual tours during the pandemic.
Additionally, mortgage applications to purchase a newly built home jumped 10.9% annually in May.
There also is a trend of people wanting to leave cities to move to suburban areas after experiencing lockdowns and work-from-home orders.
“Builders report increasing demand for families seeking single-family homes in inner and outer suburbs that feature lower density neighborhoods,” said NAHB Chief Economist Robert Dietz. “At the same time, elevated unemployment and the risk of new, local virus outbreaks remain a risk to the housing market.”
