U.S. Homebuilder Optimism Makes Record Rebound as Buyers Return

(C) Bloomberg. A worker stands at a low income housing construction site in Schenectady, New York. Photographer: Angus Mordant/Bloomberg

(Bloomberg) — 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% 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.

(C)2020 Bloomberg L.P.