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Builder Confidence Jumps in June

Builder confidence for the single-family housing market experienced its biggest increase in nearly a year in June, though sentiment still remains on the negative side.

The National Association of Home Builders' [1] (NAHB) Housing Market Index [2] (HMI), released Monday in collaboration with Wells Fargo [3], registered 49 this month, up from 45 in May. A value below 50 indicates more builders view market conditions as "poor" rather than "good."

Despite falling one point short of the benchmark, the moderate uptick in 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," Kelly added.

The HMI started the year off on a relatively strong note, measuring 56 in January before plummeting as inclement weather and adverse market conditions drove down sales activity.

Out of the three index components, the gauge of expected single-family home sales in the next six months was the healthiest, reading 59 in the latest index. Also improving was the measure for current sales, which improved six points to climb up to 54.

Meanwhile, the gauge for prospective buyer traffic was up only slightly to 36, still struggling to recover from a nine-point drop in February. The last time that component measured above the 50 mark was 2005.

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

Confidence improved in three of the four Census regions, rising to 49 in the Midwest, 52 in the South, and 53 in the West. In the Northeast, sentiment fell two points to an index level of 33.