Homebuilders warmed to the struggling single-family market in June,
according to the National Association of Homebuilders' (NAHB) Housing Market Index, which improved by four points to a five-month high of 49. Index scores above 50 indicate a positive overall perception of the market, and have not been reached since January.

Builder confidence in the market for new single-family homes rose four points to 49 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released June 16, one point shy of the threshold for what is considered good building conditions.

"After several months of little fluctuation, a four-point uptick in builder sentiment is a welcome sign and shows some renewed confidence in the industry," said NAHB Chairman Kevin Kelly. "However, builders are facing strong headwinds, including the limited availability of labor."

All three index components posted gains in June. Most notably, the component gauging current sales conditions increased six points to 54. The component gauging sales expectations in the next six months rose three points to 59 and the component measuring buyer traffic increased by three to 36.

"Consumers are still hesitant, and are waiting for clear signals of full-fledged economic recovery before making a home purchase," said NAHB chief economist David Crowe. "Builders are reacting accordingly, and are moving cautiously in adding inventory."

The Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor," and asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

Looking at the three-month moving averages for regional HMI scores, the South and Northeast each edged up one point to 49 and 34, respectively, while the West held steady at 47. The Midwest fell a single point to 46.