The NAHB housing market index for June jumped to 52. This is the highest level since April 2006.
This beat expectations for a rise to 45, from 44 in May.
The eight point increase from May to June is the biggest one month gain since August and September of 2002.
A reading over 50 shows that more builders think sales conditions are good rather than poor.
What’s more? All three sub-indices gained in June.
The index gauging current sales conditions climbed eight points to 56. The index measuring future sales expectations climbed from 52 in May to 61 in June — the highest level since March 2006. Finally, the index of prospective buyers traffic increased seven points to 40.
Investors track this index because it is a leading indicator for housing starts. “Today’s report is consistent with our forecast for a 29 percent increase in total housing starts this year, which would mark the first time since 2007 that starts have topped the 1 million mark,” NAHB Chief Economist David Crowe said in a press release.
In recent months it was reported that affordable mortgage rates were helping buyers. But mortgage rates have been rising and while these haven’t impacted purchase applications, they have weighed on refinance applications. Today’s report shows that homebuilders aren’t fazed by the rise in mortgage rates.
The NAHB housing market index is a sentiment index in which respondents rate not just the housing market but also the economy in general.
The index draws on builder perceptions of current single-family home sales and sales expectations for the next six months. It also includes builders’ expectations of traffic of prospective buyers.