NAHB Records Biggest Increase Ever in Housing Market
PITTSBURGH, PA – June 18, 2020 –The National Association of Home Builders and Wells Fargo recently released the latest data from their monthly Housing Market Index survey.
According to the NAHB, the survey showed that builder confidence in the market for newly built single-family homes jumped 21 points to 58 in June, noting that a reading above 50 indicates a positive market. According to Bloomberg, analysts had anticipated a reading of 46, and this increase is reportedly the biggest on record.
“As the nation reopens, housing is well-positioned to lead the economy forward,” said NAHB Chairman Dean Mon, a home builder and developer from Shrewsbury, New Jersey. “Inventory is tight, mortgage applications are increasing, interest rates are low and confidence is rising. And buyer traffic more than doubled in one month even as builders report growing online and phone inquiries stemming from the outbreak.”
All of the HMI indices posted gains in June. The index gauging current sales conditions jumped 21 points to 63, the component measuring sales expectations in the next six months jumped 22 points to 68 and the measure charting traffic of prospective buyers rose 22 points to 43.
“Housing clearly shows signs of momentum as challenges and opportunities exist in the single-family market,” said NAHB Chief Economist Robert Dietz.
“Builders report increasing demand for families seeking single-family homes in inner and outer suburbs that feature lower density neighborhoods. At the same time, elevated unemployment and the risk of new, local virus outbreaks remain a risk to the housing market.”
From a regional perspective, the Northeast rose 31 point to 48, the South jumped 20 points to 62, the Midwest posted a 19-point gain to 51 and the West rose 22 points to 66.
Bloomberg cited a John Burns Real Estate Consulting survey, which said that home buyers listed COVID-19 as the reason for purchasing now, citing a dislike of current home layout and a desire for more space.
The demand for brand-new homes also bounced back as the index of homebuilder stocks rose 98% through last Monday, up from the stock market tumble in March.
The housing survey estimations echo the latest construction job survey numbers from the Associated General Contractors of America, which was released at the beginning of this month.
The AGC, though, still noted that there’s a need for government aid in the industry despite the positive trend in numbers.
“The huge pickup in construction employment in May is good news and probably reflects the industry’s widespread receipt of Paycheck Protection Program loans and the loosening of restrictions on business activity in some states,” said Ken Simonson, AGC’s Chief Economist. “Nevertheless, the industry remains far short of full employment, and more layoffs may be imminent.”