U.S. homebuilders’ outlook improved in June as record-low interest rates and demand for more space spurred buyers to re-emerge after the coronavirus shut down sales and construction.
A gauge of builder sentiment jumped to 58, a 21-point gain from May, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
Analysts expected a reading of about 46, the average of 37 estimates compiled by Bloomberg. A rating above 50 is considered positive. June’s increase was the biggest on record for the index and followed a seven-point uptick in May.
“Builders report increasing demand for families seeking single-family homes in inner and outer suburbs that feature lower-density neighborhoods,” NAHB Chief Economist Robert Dietz said in a statement. “At the same time, elevated unemployment and the risk of new, local virus outbreaks remain a risk to the housing market.”
Demand for new homes has bounced back despite the economic damage of the pandemic, sending an index of homebuilder stocks up 98 per cent through Monday from this year’s March 23 nadir.
More than two-thirds of recent home buyers cited Covid-19 as the reason for purchasing now, according to a survey released June 12 by John Burns Real Estate Consulting. The buyers listed low rates, dislike of their current home layout and desire for a larger house as their pandemic-related motivations, according to the poll of 5,000 buyers.