Builder confidence rose one point in June, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). NAHB’s monthly survey measures sentiment from builders towards various market indices such as prospective buyer traffic and future sales expectations.
This continued growth in builder confidence could be attributed to current conditions in the existing market. Buyers are turning to new construction as supply in the existing market fails to keep up with demand. Furthermore, builders are able to offer incentives that the existing market cannot, such as rate buy-downs.
Although June’s survey marked the seventh straight month of increases, other market forces are creating pressures on what buyers can afford.
“Although builders continue to remain cautiously optimistic about market conditions, the quarter-point rise in mortgage rates over the past month is a stark reminder of the stop and start process the market will experience as the Federal Reserve nears the end of the ongoing tightening cycle,” said NAHB Chief Economist Robert Dietz.
The current rate for an average 30-year mortgage continues to hover around 7%.