US housebuilder sentiment improves a touch - NAHB

Sentiment among US housebuilders improved a touch in July, according to data released on Tuesday.

The National Association of Home Builders/Wells Fargo housing market index ticked up to 65 from 64 in June, beating expectations for an unchanged reading.

The index measuring current sales conditions rose one point to 72, while the component gauging expectations in the next six months edged up one point to 71 and the index for buyer traffic increased one point to 48.

Looking at the three-month moving averages for regional HMI scores, the South rose one point to 68 and the West was also up one point to 72. The Northeast was unchanged at 60 and the Midwest fell one point to 56.

NAHB chief economist Robert Dietz said: "Builders report solid demand for single-family homes. However, they continue to grapple with labour shortages, a dearth of buildable lots and rising construction costs that are making it increasingly challenging to build homes at affordable price points relative to buyer incomes.

"Even as builders try to rein in costs, home prices continue to outpace incomes. The current low mortgage interest rate environment should be getting more buyers off the sidelines, but they remain hesitant due to affordability concerns."

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: The headline index was lifted by one-point gains in all three components - current sales, expectations and buyer traffic - but overall the survey has moved sideways in recent months.

"This is slightly surprising given the 110bp drop in the national average 30-year mortgage rate since November, but confidence was knocked by the rollover in stock prices in Q4 and the recovery has been slow.

"Still, mortgage demand now appears to be starting to respond to the drop in rates and we expect housing market activity, both sales and construction, to strengthen in the second half of the year. Mortgage lending standards tightened a bit after the stock maket fell but with the market now at new highs, we expect no further tightening. The driving force in the housing market in H2 should be the drop in rates, coupled with robust employment growth and elevated consumer confidence."