A stall in job growth hit home builder confidence in June.
A monthly confidence index from the National Association of Home Builders saw just a one point gain after posting a 4 point spike in May. The survey now sits at 29, with 50 the line between positive and negative sentiment.
“While the June HMI is in keeping with our forecast for gradually improving single-family home sales this year, recent economic reports have shown some weakening in the pace of recovery likely factored into the marginal gain,” said NAHB chief economist David Crowe in a written release. “In addition, builders across the country continue to report that overly tight lending conditions and inaccurate appraisals are major obstacles to completing sales at this time.”
The component of the index measuring current sales conditions rose two points, while sales expectations over the next six months and buyer traffic remained unchanged, according to the report. The overall index is now at the highest level since May 2007. The index hit its lowest level, 13, exactly one year ago.
Builders gained confidence in the Midwest and West regions, likely because investors there have been eating up foreclosed properties at a fast pace, hoping to cash in on the hot rental market. Inventories of distressed properties in cities such as Phoenix and Las Vegas, and parts of California, are well below the levels of the past few years. Builders have been in competition with these distressed properties, many of which are relatively new construction.
New construction has seen considerable gains so far this year, much of it, however, on the back of the multifamily market. Housing starts in April were up nearly 30 percent over a year ago, although still well-below historically normal levels.