Home Builders’ Confidence Rises

Posted on August 17, 2016

U.S. home builders said they are becoming more optimistic about the market for single-family homes, boosting hopes that a recent rise in home buying could lead to more construction.

A measure of home builder confidence rose two points from a month earlier to 60 in August, matching the second-highest level of the year, the National Association of Home Builders, a trade group, said Monday. The reading matched the expectation of economists surveyed by The Wall Street Journal.

Economists track the index because when builders gain confidence, they are more likely to begin projects. Higher construction creates jobs, in turn lifting the economy to stronger growth.

Sentiment among home builders has been choppy this year, and the index is lower than it was from a year earlier. But builders remain optimistic overall despite a slowdown in economic growth in the first half of the year.

“Builder confidence remains solid in the aftermath of weak GDP reports that were offset by positive job growth in July,” the NAHB’s chief economist, Robert Dietz, said in a statement. “Historically low mortgage rates, increased household formations and a firming labor market will help keep housing on an upward path during the rest of the year.”
Monday’s report showed a measure of builders’ views about the present market rose two points to 65 this month. An index of their outlook for the market over the next six months rose a single point to 67. A third component, measuring traffic of prospective buyers, fell a point to 44.

The housing market has picked up this year. Sales of previously owned homes, the bulk of the market, rose to their highest level in more than nine years in July, according to the National Association of Realtors.

But home construction has stalled. Housing starts, or the units that builders broke ground on, fell 2% in the year through June, Commerce Department data show. The agency is set to release July figures Tuesday. Home builders have said that regulations and shortages of land and labor are preventing a stronger recovery in home construction.

News Corp, owner of The Wall Street Journal, also owns Move Inc., which operates a website and mobile products for the National Association of Realtors.