Homebuilders and construction in the housing market. (PHOTO: REUTERS)
The National Association of Home Builders said Monday its monthly Housing Market Index (HMI) of home builder confidence in single-family housing market slipped one point to 59 in July. The reading missed the median economist forecast, as those surveyed by The Wall Street Journal expected a reading of 60.
“The economic fundamentals are in place for continued slow, steady growth in the housing market,” NAHB’s chief economist, Robert Dietz, said in a statement. “Job creation is solid, mortgage rates are at historic lows and household formations are rising. These factors should help to bring more buyers into the market as the year progresses.”
Even though new home construction has risen since the economy crawled out from recession in 2009, it is still historically very weak. When builder confidence is more optimistic, they are more likely to start construction on projects, which impacts building permits and housing starts. That helps the economy grow because it creates jobs and boosts sales of a range of items from lumber to furniture.
NAHB’s chairman, Ed Brady, a home builder and developer from Bloomington, Ill., said that while demand for housing is on the increase, other pressures are weighing down new construction.
“We are still hearing reports from our members of scattered softness in some markets, due largely to regulatory constraints and shortages of lots and labor,” Mr. Brady said.
Monday’s report showed that a measure of builder confidence in the present market fell one point to 63. Their confidence in the market over the next six months fell three points to 66. And a measure of traffic of prospective buyers fell a point to 45.
