USA Housing Market Index Comes In Above Estimates In July

In this photo taken April 13, 2015, a worker helps to frame a new home at a housing tract in Las Vegas.

The index from the National Association of Home Builders and Wells Fargo signals more builders are positive than negative for every point over 50.

The NAHB revised its June index figure to 60, from the its original 59.

Homebuilder confidence hit a 10-year high in July as the housing market makes gradual strides amid stronger jobs growth. Expectations for sales over the next six months rose to 71 from 69.

Three of four regions had a decrease in single-family construction in June, paced by a 27.3 percent drop in the Northeast and a 7.1 percent decline in the West, according to the report. A reading above 50 means most builders generally hold a favorable views of the market for newly built, single-family homes. Multifamily production was up 29.4 percent to a seasonally adjusted annual rate of 489,000 units while single-family starts edged down 0.9 percent to 685,000 units. There has been a rush in the past two months to take advantage of tax incentives on multifamily homes in New York, wrote Jim O’Sullivan, economist at research firm High Frequency Economics.

Historically low borrowing costs, combined with rising rents, may also may home-buying more compelling.

U.S. 30-year mortgage rates averaged 4.23 per cent last week, unchanged from the prior week and up from 4.04 per cent from the end of 2014, the Mortgage Bankers Association said on Wednesday. The HMI hasn’t seen that level since November 2005.

“We’ve been seeing a lower amount of speculative building than we usually do”, said Stephanie Karol, a USA economist at IHS Global Insight. “Between labor shortages and the weather, we’re kind of hitting and wall and trying to work through it”.

Home-construction figures are volatile and often revised.

In Texas, builder CastleRock Communities LP started construction of 144 homes in June, up from 131 a year ago.

While builder optimism may be back to housing-boom levels, the pace of home construction remains far below.

United States housing starts rose 9.8 per cent from a month earlier to a seasonally adjusted annual rate of 1.17 million in June, the Commerce Department said on Friday.

The latest NAHB index was based on responses from 268 builders.

According to the NAHB, two of the three HMI components posted gains in July. A gauge of traffic by prospective buyers dipped one point to 43.