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Slight Drop in July Housing Market Index08-02-16 | News

Slight Drop in July Housing Market Index
Confidence of Builders Remains High

The Housing Market Index fell one point to 59 in July, but homebuilders remain upbeat about prospects for future growth in the industry, according to economists.

Homebuilders remain convinced that market conditions moving forward are sound, despite a minor hiccup in an index that measures the confidence level of construction industry executives.

The National Association of Home Builders/Wells Fargo Housing Market Index dropped one point to 59 in July, but optimism among homebuilders remains at a healthy level, according to economists at the Wells Fargo Economics Group. Any number above 50 means more homebuilders view market conditions as positive.

The July reading is still within the HMI's six-month average. The one-point drop was caused exclusively by a four-point decline in the South. The Northeast, Midwest and West regions all posted minor gains.

Wells Fargo's forecast calls for continued modest improvement in new home sales and single-family home building.

Homebuilders are concerned mostly about the availability of lots and the red tape involved in getting developments approved.

"For the past six months, builder confidence has remained in a relatively narrow positive range that is consistent with the ongoing gradual housing recovery that is underway," said Ed Brady, chairman of the National Association of Home Builders.

"However, 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," Brady added.

Remodeling Market Index
A quarterly index managed by the National Association of Home Builders that measures the remodeling industry has dropped a mere point to 53.

The NAHB says the latest reading, for the second quarter of 2016, is still above 50, and that means more remodelers are reporting higher market activity than the opposite, compared to the previous quarter. It is also the 13th straight quarter that the RMI has been in positive territory.

"Overall, remodelers are reporting steady work in the second quarter," said Tim Shigley, chairman of the NAHB's Remodelers Market Index. "With an increase in calls for bids, we should see the market pick up slightly moving forward."