WASHINGTON — U.S. home builder confidence held largely steady in June, according to a report released on Monday by the National Association of Home Builders (NAHB) and Wells Fargo, as builders continued to contend with elevated mortgage rates, affordability concerns and higher construction costs.
The monthly Housing Market Index (HMI), a widely watched measure of sentiment among builders of newly constructed single-family homes, was released amid ongoing uncertainty in the housing sector. The June report followed a modest improvement in May, when builder confidence rose after weakening earlier in the spring, according to NAHB data. Details of the June reading indicated that overall sentiment showed little change from the previous month.
The housing market has faced persistent challenges in recent months. Industry groups and economists have pointed to borrowing costs, home affordability and material expenses as key factors affecting demand for new homes. Mortgage rates have remained above levels seen earlier in the year, while builders have continued to report concerns about buyer traffic and financing conditions.
In May, the HMI rose to 37 from 34 in April, according to NAHB and Wells Fargo. While that marked an improvement, the index remained below the neutral level of 50, indicating that more builders viewed conditions as poor than good. Measures of current sales conditions, expected sales over the next six months and prospective buyer traffic all posted gains in May.
“Builder confidence in the market for newly built single-family homes increased” in May, the NAHB said at the time, citing stronger readings across its principal components. Industry officials also reported that fewer builders reduced prices compared with the previous month, although sales incentives remained common.
Housing industry representatives have said demand for new homes continues to be supported by limited inventories of existing homes in some markets. At the same time, affordability pressures have weighed on potential buyers, particularly first-time purchasers. Builders have also cited higher costs for labor, materials and financing as ongoing challenges.
The June report was closely watched by investors, economists and policymakers as a gauge of conditions in the residential construction sector. Housing construction and new-home sales are considered important indicators of broader economic activity because of their links to employment, consumer spending and demand for building materials.
As of Monday, NAHB officials said the industry continued to monitor mortgage-rate trends and housing affordability. The association is expected to release additional housing market data in the coming weeks, including figures on residential construction activity and new-home demand.
