Confidence among U.S. home builders rose briskly this month,
an early sign the housing market is picking up after a lackluster winter. The
National Association of Home Builders’ confidence index climbed four points to
a reading of 56 in April, the industry group said Wednesday. A reading above 50
means most builders generally hold a favorable view of the market for newly
built, single-family homes.
Economists surveyed by The Wall Street Journal had expected
an April confidence reading of 55. The report, based on a survey of builders,
showed that traffic of prospective buyers remains weak, at a reading of 41 this
month. But builders’ view of present sales rose three points to 61. And their
expectations for sales over the next six months climbed five points to 64, the
highest level since December.
The pickup in confidence comes after a recent surge in
new-home sales. The government reported home sales rose in February
to a seven-year high. Many home builders have reported a strong start to the
spring selling season.
The combination of rising sales and confidence could lead
builders to step up construction of homes, which would create jobs, boost sales
of materials, and stoke the economy. However, new-home construction has
remained choppy throughout the recovery even when builder confidence has run
high.
New-home sales are about a tenth of the housing market.
Sales of previously owned homes, the bulk of the market, picked up in
February but haven’t reached their pace of late last year, and they remain far
weaker than late 2013.
The weakness comes despite historically low interest rates
and a recent stretch of strong job creation. And the housing market faces
headwinds: Job growth slowed last month and the U.S. economy has lost momentum
since last summer. Mortgage rates are expected to rise if and when the Federal
Reserve raises short-term interest rates, expected to occur later this year.
Higher home prices may be preventing many buyers from qualifying for a
mortgage.
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