June is typically a slow month for homebuilders, but a key confidence level reading jumped by eight points this month, the largest monthly jump in more than a decade, according to the National Assn. of Homebuilders/Wells Fargo Housing Market Index.
Homebuilder confidence level is at 52 in June, the first time the metric has risen above 50 since 2006. A reading above 50 mean builders see conditions as good rather than poor.
The housing recovery has finally taken hold, economists have noted. As demand grows, more homes are being built.
“With the low inventory of existing homes, an increasing number of buyers are gravitating toward new homes," said Rick Judson, the association's chairman and North Carolina homebuilder.
But still, the slow-growing economy is holding back some growth.
"Builders are experiencing some relief in the headwinds that are holding back a more robust recovery," said the association's chief economist, David Crowe.
Crowe said Monday's report is consistent with their forecast of 1 million housing starts this year, which represents a 29% increase over the year before. That would be the highest level of housing starts since 2007.